After the “fake door”, where should online education players go?
Author | Huang Yanhua
Editor in charge | Egg Manager
Produced | Bullet Finance
Chen Xiangdong’s start in 2020 is quite magical.
Following the short sale by the Grizzlies on February 25, on April 14, the one he founded with whom to learn from was questioned by the citron short report again. In his report, Citron said that whoever learns fictional revenues from 70% should suspend stock trading and investigate. Affected by this, the stock price of who started with that day fell more than 9%, and the market value evaporated by nearly 5 billion yuan.
“We are really speechless for such a shameless report.” Chen Xiangdong reprimanded in the circle of friends. The official response from who learned later: The short report is completely unaware of the company ’s main source of K12 extracurricular tutoring income is who to learn from its brand, Gao Tu Classroom, whose ignorance of the company ’s business operations is outrageous.
And just a week ago, the education giant has exposed its internal problems in the future. Good Future said that in the internal audit, the suspected employee colluded with external suppliers, forged contracts and other documents, and erroneously exaggerated the “light class” sales data. The employee has been detained by the local police. Affected by this news, the future stock price plunged 28%.
In fact, no matter who is accused of fraud or admits fraud, whoever learns from and learns from the future is pushed to the forefront of public opinion.
1. Behind the “fake door”
The industry has different opinions about who to learn from.
According to industry insiders, the Grizzlies do not understand the Internet very much. They have not studied in depth who they learned business from, nor have they gone through rigorous field investigations like the short-selling institution, but only made speculation through some superficial information.
On the question of investigation, Li Yang (pseudonym), a senior analyst of an education investment company, basically agrees with the views of the above-mentioned industry insiders. He revealed to “Bullet Finance” that on the third day of the first month of this year, US investment companies sent investigators to sneak into the warehouses, printing plants and express delivery companies with whom they learned.
“Because who learned to mail the textbooks, how many textbooks were printed by the printing house, and how many orders the courier company issued, you can find out.” He said that the investigator only found the printing plants and courier companies in Beijing There are no printing factories and courier companies in Hebei, so this conclusion is somewhat arbitrary.
However, some investors believe that Citron ’s many questions about who to learn from this time are reasonable. The K12 large class teaching is currently in the “horse race” stage, other companies can not make profits, with whom How can learning achieve high growth while maintaining profitability?
And Zhang Diou, the founder of Data Cat, told “Bullet Finance” that the appeal of large class teachers has a gathering effect, which in turn promotes the large-scale online class large-scale profitability.
“It ’s not for no reason to learn from whom you can make money,” Li Yang explained to “Bullet Finance”.Low, this is mainly due to the fact that it captures the traffic dividends of O2O, local push and WeChat group. “
Specifically, on O2O, as the platform has accumulated data of 600,000 educational institutions and teachers, and more than 200,000 parents, with whom to learn to use the teacher effect to transform; on the ground, with whom to open before learning 16 branches, these branches are responsible for the specific local push, and because of the local push, the cost of acquiring customers with whom can be reduced to 1/5 of online customers; on WeChat group, currently buy a phone from the market The number costs 200 yuan, but in 2017 and 2018, only 5-6 yuan can get a parent’s WeChat.
“On the other hand, the teacher who teaches the teacher has a higher output value. The peers do online double teacher classes with a unit price of 2,000 yuan per customer, and the peers do online double teacher classes with a unit price of 10,000 yuan per customer For example, homework teachers and ape tutors can earn about 400,000 a year, and who they learn from can earn 800,000. “Li Yang said.
However, the issue of large-volume order slips indicated by the short-selling agency in the report is still in doubt. Li Yang revealed that despite the capital blessings, due to long-term losses, there is a higher probability that the education training institutions that focus on online one-on-one or small class classes will have to pay the bills. “Single-month online class fees are more than 1,000 yuan, plus it is easy to make a profit, and institutions do not need to pay bills.” He said.
Li Yang said he did n’t agree with the short-sellers who mentioned there was no advertising problem. “Gao Tu Classroom makes 40 to 50 advertisements on Douyin headlines every day.” According to his understanding, in the first quarter of this year, Gao Tu Classroom was the largest advertiser. Advertisement to Gaotu Classroom. But even with a lot of effort in advertising, learning from anyone has not fundamentally solved the problem of acquiring customers.
However, compared with friends, who advertises ads seems to be “little to see.” “In March 2019, Ape Counseling signed a large contract with Douyin, which caused Douyin and Toutiao to exceed 150% of the annual educational advertising task.” Li Yang said that from April 2019, who has accumulated with the previous learning The traffic bonus gradually fades. Since then, it may need to obtain customers through external advertising, but if the advertising expenditure has been large, who can learn from this year whether it can continue to make money is a problem.
At the same time, he believes that the reason why he learns from will be shorted twice, probably because Chen Xiangdong has been flashing his words. “For example, who to learn from on April 8 did not disclose some of the sharp questions asked by the media, nor did it ask a third-party accountant for review.”
Following the report by Xiangci, the foreign media reported that Law Offices of Howard G. Smith, Holzer & Holzer and The Schall Law Firm, etc., announced that they represented investors who learned from the company Its management may investigate the violation of the federal securities laws.
It is worth noting that the US law firm is not only investigating with whom to learn, but also has a good future of exposing “house ugliness”. Recently, the US law firms Rosen, Howard G. Smith and Schall announced that they are investigating Good Future and soliciting clues from investors who hold Good Future stocks and suffer losses.
In fact, good or bad comes from the reaction that the incident caused in the industry can be described as mixed.
“Once in the future, after a round of self-pros and cons assessment, it still feels like admitting mistakes voluntarily, so the punishment may be much smaller.” An industry source who did not want to be named believes that once the fraud of listed companies in the US is disclosed, the price It is huge, and the business involving fraud is a non-core business for the future.
At the same time, there is no lack of opinions that employees are just scapegoats, and it is impossible for senior executives to be unaware of the future. “Now I say it myself because the auditing company is more cautious because of the financial fraud incident of Ruixing Coffee.” After all, the future will release Q4 and full-year financial reports for fiscal year 2020 in the near future, which is at the audit stage of the annual report.
“It may be a coincidence that this self-exposed fraud in the future is good.” Zhang Diou, the founder of Data Cat, told “Bullet Finance” that on the one hand, if it is a company’s behavior, then it must have a contract and a certain amount of falsely increased revenue comes in. . When there is a problem, the police will catch more than one person, but will join the financial, internal audit, cashier and other relevant personnel.
On the other hand, from the current point of view, because the police have not announced the results, it is not yet known whether the employees ’personal behavior or the company ’s behavior. “If it is company behavior, it can be called financial fraud, and personal behavior can only be employee fraud.” Zhang Diou explained.
However, in this storm, the companies or employees involved cannot be alone.
2. Who to learn from and a good future AB face
Sometimes, it ’s not always a good thing to have outstanding performance and stock price performance. It ’s the best proof of who you are learning from and are in the forefront of fraud.
Learning from Who was founded by former New Oriental CEO Chen Xiangdong in June 2014. The early positioning was “Education O2O platform for linking teachers and students”. In March 2015, who learned from who received $ 50 million in Series A financing.
Since then, because of poor management, the reputation with whom to learn is damaged. According to Li Yang’s recollection, 600,000 teachers and institutions were invited to settle on the platform, and they were charged a platform fee of RMB 100,000-300,000 per year. However, due to the very limited flow of the platform, many teachers and institutions cannot recruit students. “Everyone hasn’t made money, and they are generally dissatisfied with who they learn from, and their reputation is not good enough.”
After 2017, with whom to learn decisively and switch to B2C mode, then focus on the To C business, force K12 large class, and finally return to life. Li Yang believes that there are deep-seated reasons behind the transformation with whom.
From the demand sideIn view of this, “online one-to-one” is not a product that ordinary families can consume. Statistics show that in 2019, the per capita disposable income of urban and rural residents in China was 30,700 yuan. But because the current online one-to-one course costs 300-400 yuan / hour, it means that 90% of students cannot choose online one-to-one tutoring.
From the perspective of profitability, regardless of the online one-on-one or online small class mode, it is difficult to solve the problems of traffic acquisition, profitability and teacher supply. The data shows that VIPKID accounts for 68.4% of the online children’s one-to-one English education market share, and the head one-to-one has nearly 80% of the K12 online one-to-one general counseling market, but the two are still losing money. “Even if the market share reaches 90%, it may not be profitable. After all, one-to-one users only account for 10% of the total users.” Li Yang said.
At the same time, Li Yang also admitted that some students have little effect on online classes. However, because only 5% of children in China can be admitted to 985/211 colleges, and the economic conditions of most families are ordinary, they can only choose online large class.
In 2018, with whom the school revenue tripled to 400 million yuan, turned losses into profit, and was listed on the New York Stock Exchange in June 2019, becoming the first online profitable scale Education company. In just 8 months, its market value has increased from US $ 2.7 billion to over US $ 10 billion, a fourfold increase.
The data shows that whoever learns from has grown its revenue by 400% for five consecutive quarters and its profits by 400% for seven consecutive quarters. According to the financial report, with whom to learn the net income of fiscal year 2019 is 2.115 billion yuan, an increase of 432.3%, cash income of 3.358 trillion yuan, an increase of 412.6%; non-GAAP net profit of 287 million yuan, 25.57 million yuan in the same period last year, Increased by more than 10 times.
However, along with the sharp rise in performance and stock prices, there are some “troubles” to learn from.
At the end of 2019, who to learn App from was notified by the “App Special Governance Working Group”. According to the report, there are acts of collecting multiple personal sensitive information from who to learn the App, including the user’s ID number, bank account, etc., and the user’s purpose has not been informed at the same time, and there are also third parties that do not list the embedded Yidun, Xiaomi push, etc. The purpose and type of the personal information collected and used by the SDK, and the function of canceling the user account is not provided.
Not long ago, VIPKID also sued who learned to “instruct employees to use improper means to steal business secrets such as user lists” and claimed 8 million yuan. The court of Beijing Haidian District has accepted the case.
In addition, the data from the Black Cat Complaint Platform shows that some postgraduate students have recently filed a collective complaint about the problems with whom to learn from the platform: “Privately changing the teacher of the postgraduate course, the difficulty of refunding the fees, and the rules have been changed many times.”
It is not difficult to see who is learning from the dilemma of “shorting outside, complaining within”.
Compared with whom to learn, the future is less questioned by the outside world.
Weiwei came from the listing on the New York Stock Exchange in 2010 and became the first domestic elementary and secondary education institution listed in the United States. After the listing, the future revenue and profit growth rate can be called “perfect”.
For the fiscal year 2011-2019, the future compound annual revenue growth rate is 48%, and the net profit compound growth rate is about 40%. At the same time, the market value of Good Future rose all the way, surpassing 10 billion US dollars in May 2017. It surpassed New Oriental for the first time in July of that year and became the Chinese education company with the highest stock market value in the United States.
Perhaps the previous performance was too eye-catching, so when Good Future first encountered a crisis of trust, it immediately aroused strong attention from public opinion at home and abroad. From June 13 to July 26, 2018, Hunshui Company issued four short-selling reports in a row, saying that there are frauds in future financial reports, including the problems of profit exaggeration, false reporting of income, and exaggeration of the number of registered users.
Regarding short selling, Good Future firmly responded that the allegations made by the agency contained a large number of errors, unconfirmed guesses and malicious interpretations of the incident. However, affected by this, the total market value of Good Future fell from US $ 24.3 billion on June 12, 2018 to US $ 18.1 billion on July 31, 2018, and the total market value evaporated by US $ 6.2 billion.
After 10 consecutive years of high growth, the future shows signs of fatigue in fiscal year 2020. In terms of net profit, its net loss to its mother in Q1 fiscal year 2020 was US $ 7.3 million, compared with US $ 66.8 million in the same period last year. In the Q2 financial report, the net loss to the mother continued to expand to 14.4 million US dollars; the net loss for two consecutive quarters reached 21.7 million US dollars. It wasn’t until Q3’s financial report that it turned losses into profit, with a profit of 28.177 million US dollars, down 77% from the 124 million US dollars in the same period last year.
In the past two years after being shorted by muddy water, with the “fights of war” in the domestic online education industry, the future is not easy.
3. The trend of capital tightening appears
No matter who learns from online, or a good future starting from offline, from the current perspective, they are undoubtedly one of the beneficiaries in the online education industry with a scale of 100 billion.
Since 2013, the development of K12 online education has reached a new level. From standardized products and services to personalized services and products, the focus of capital on projects is constantly shifting.
“In 2013, VC (Venture Investment) took the lead in entering the market, looking at the project with the logic of the Internet model, and the focus was on the team’s traffic acquisition capabilities and innovative models.” Zhang Diou, founder of Data Cat, said In a year, the online education industry is particularly innovative.
He explained the question bank as an example. Although the question bank has already appeared, the question bankWhat is the direction of the application, and there are many “brainholes open” ideas-from the launch of the question bank app represented by the ladder network, to the launch of the search question product based on the question bank, and then to the self-adaptive question bank Learning products launched.
In addition, creative projects that combine with the mobile Internet in creative and self-examination subdivisions can receive investment. “Of course, this refers to the overall evolution of the question bank project, which has lasted for several years from 2013.”
The time goes back to 2014, when the O2O model quickly broke out in China. But a year later, the entire industry encountered a capital winter and the O2O bubble gradually subsided. At this time, VC has slowed down the pace of investing in online education and replaced it with industrial investors dominated by strategic investment.
“Compared with VCs that shift their focus to unicorns or mid-to-late projects, industrial investors are more concerned about whether the invested projects can integrate with their ecology, and they will not over-pursue the financial returns that the latter can bring. Sometimes even some projects that obviously lose money. “Zhang Diou said to” Bullet Finance “.
It ’s interesting to note that although many education startups held hundreds of thousands or even millions of registered users in 2016, they turned to online teaching because they could n’t realize it. The law gradually regulated, “In the past, the Internet model focused on traffic and the realization of pure content. Later, it was discovered that the essence of education is people and services based on teaching knowledge, and parents are more willing to pay for services.” Zhang Diou said.
In fact, over the past few years, various investment institutions have invested huge amounts of capital in the education track. Although they have not figured out a feasible online education model, at least they know which models are not feasible, and the models that have been proven by the market are far less effective. There are many successful models, and investors have become more cautious.
“Since 2019, capital has continuously raised the threshold for investment.” Zhang Diou believes that capital has paid little attention to early projects before the A round. Except for star entrepreneurial projects, capital’s requirements for early entrepreneurial projects are to run out of finance first. data. In other words, capital is now more inclined to mature online education companies.
From a broad perspective, VC has been investing in new areas of education. He gave an example. At that time, there was a policy requiring all pharmacy pharmacists to hold a certificate, and VC turned its attention to the field of pharmacist training. In addition, VCs can also be seen from the children’s programming and thinking tracks in the past few years.
“The total amount of capital invested in early and mid-term projects is decreasing.” Zhang Diou said that on the one hand, after the overall economic environment is down, fund raising and exit are more difficult; Educational projects, such as the team needs to have educational genes and Internet genes, as well as innate resources that can support the business model of the project.
At the same time, he also pointed out that for the later projects after the B round, in addition to looking at the fundamentals of the business, the capital is more concerned about whether it has the opportunity to rank among the top three, to see it in the industryWhether the position has sufficient monopoly capacity, not just competitiveness.
At the same time, investors are also more concerned about whether the exit channel is clear, such as whether the investors behind the invested project have overseas well-known funds, BAT, etc. “Even if there is a bloody listing in the future, there may be an order in the international capital market.” Zhang Diou said bluntly.
“Before 2019, Capital pays more attention to the growth of invested projects.” Qingjun Capital project manager Liu Junbin revealed to “Bullet Finance” that since last year, for K12 online one-to-one projects, capital has paid more attention to refined operations Ability, such as renewal and re-introduction; for K12 online small class projects, capital pays more attention to the full class rate and renewal rate; for K12 online large class projects, capital pays more attention to the ability to sink market flow channels. It is important to have “special channels” that reduce the cost of customer acquisition.
In addition, he also said that capital is also more concerned about having low-cost traffic channels To B or To G-type projects, such as providing offline institutions or public schools with marketing, system and other services.
From the current point of view, although the epidemic has accelerated the increase in the penetration rate of online education, the incident of counterfeit stocks in education is bound to have an impact on the primary and secondary markets.
“To a certain extent, it is a good thing, it is a process of de-authenticity.” In Zhang Diou’s view, the fraud incident will reduce the confidence of US investors, which in turn will cause a long-term stock price downturn. There will be more short-selling institutions concerned about the education stocks. But for financially regulated education US stock companies, the impact is smaller.
Furthermore, the fraudulent incident will raise the threshold for listing in the United States, and the fund will be more cautious about project investment at all stages, especially for later project financing.
“The capital will be more strict with the invested companies. The invested projects need to provide users with reasonable consumption behavior, consumption habits, phone numbers and ID numbers,” Liu Junbin added.
Since 2019, the online tutoring platform Xueba one-on-one and Liyou one-on-one have stopped operating one after another, and the industry has been circulating the saying that the online education industry has experienced a winter of capital.
“Those whose online business models are too focused on one-to-one online education companies have a high chance of being eliminated.” Zhang Diou said that although the online one-to-one financial model is linear, the management level is non-linear. For example, if each teacher serves 1 student, the net profit is 100 yuan. If you manage 10,000 teachers, you need to equip them with a management team. The pressure on enrollment and platforms will also increase, and the related costs will not rise with performance. And decrease.
“In the future, online education companies that do not focus on teaching and research will also be expelled.” He said.
4. Conclusion
When the outbreak hit, people witnessed the online education press the “fast forward button”, ushered in a new opportunity for a full outbreak.
But with the successionThe exposed “counterfeiting incidents” made people understand that the teaching effect and user experience are still the essence of online education and the foundation for testing the strength of online education companies. If you try to rob the market by dishonest behavior and win the favor of users and investors, you will end up with a “bamboo basket”.
Behind those who learned from being short-selling and not coming out of fraud, perhaps it is a signal that investors are more cautious, the barriers to listing in the United States are higher, and the entire education industry is in urgent need of reshaping.
Online education has entered the second half, and product efficiency, innovation, flow, capital, and profitability will all be the keywords for the development of various companies. However, only companies that have been really hard-working products and improving operational capabilities can “successfully land” ——The “Jungle Rule” of the survival of the fittest will select people for a truly well-educated enterprise.