SHENZHEN, China, Aug. 18, 2021 /PRNewswire/ -- Meten EdtechX
Education Group Ltd. (Nasdaq: METX) ("Meten EdtechX" or the
"Company"), one of the leading omnichannel English language
training ("ELT") service providers in China, today announced its unaudited financial
results for the second quarter and the first half year ended
June 30, 2021.
|
Q2
2021
|
HY
2020
|
|
RMB
(m)
|
YoY
(%)
|
RMB
(m)
|
YoY
(%)
|
Gross
billings
|
172.6
|
7.3%
|
348.0
|
22.0%
|
Revenues
|
204.8
|
8.2%
|
411.3
|
10.9%
|
General adult
ELT
|
79.3
|
38.3%
|
146.3
|
29.3%
|
Online ELT
|
60.9
|
(23.1%)
|
132.2
|
(15.4%)
|
Overseas training
services
|
37.0
|
97.4%
|
76.9
|
87.5%
|
Junior ELT
|
23.1
|
(27.1%)
|
48.3
|
(12.4%)
|
Junior ELT- under
"Meten" brand
|
21.4
|
256.3%
|
39.2
|
269.3%
|
Junior ELT- under
"ABC" brand
|
1.7
|
(93.3%)
|
9.2
|
(79.4%)
|
Gross
Profit
|
66.2
|
23.4%
|
137.0
|
52.0%
|
Gross Profit
Margin
|
32.3%
|
4.0 ppts
|
33.3%
|
9.0 ppts
|
Adjusted net
loss1
|
(75.7)
|
16.2%
|
(128.9)
|
32.3%
|
|
1Non-GAAP
measure. For more information about non-GAAP financial measures,
please see the
section captioned "About Non-GAAP Financial Measures" at the end of
this press release.
|
Highlights
- 2Q 2021 revenue increased 8.2% year-on-year to RMB204.8 million (US$31.7
million), HY 2021 revenue increased 10.9% year-on-year to
RMB411.3 million (US$63.7 million), primarily as a result of the
strong rebound in gross billing after the impact of COVID-19
faded.
- Supported by investments in the Junior ELT segments and new
product development, revenue for Junior ELT under the "Meten" brand
increased by 256.3% year-on-year in 2Q 2021 to RMB21.4 million (US$3.3 million). Revenue for Junior ELT
under the "Meten" brand increased by 269.3% year-on-year in HY 2021
to RMB39.2 million (US$6.1 million).
- 2Q 2021 gross profit increased 23.4% year-on-year to
RMB66.2 million (US$10.2 million), primarily as a result of the
improvement of gross billings and operational efficiency. Gross
profit margin increased 4.0 percentage points year-on-year to
32.3%. HY 2021 gross profit increased 52.0% year-on-year to
RMB137.0 million (US$21.2 million). Gross profit margin increased
9.0 percentage points year-on-year to 33.3%.
- As of June 30, 2021, Meten
EdtechX had 102 learning centers in operation. To optimize the
layout of offline centers, the Company closed another 8 offline
learning centers by the end of the second quarter of 2021.
- 2Q 2021 adjusted net loss decreased 16.2% year-on-year to
RMB75.7 million (US$11.7 million). HY 2021 adjusted net loss
decreased 32.3% year-on-year to RMB128.9
million (US$20.0
million).
Alan Peng, Chief Executive
Officer of Meten EdtechX commented:
"Our strong results from second quarter reflect our confidence
in our team's ability to consistently execute on our strategy. We
remain focused on meeting the needs of market and navigating the
ongoing impact of COVID-19 on our business. To achieve our
long-term operational objectives, we have made many business
adjustments and optimizations. We have transferred all offline
courses to online courses and will allow all offline students to
schedule online synchronized courses in September. We plan to
gradually reduce our offline learning centers to 1-2 in each city
and make these centers become learning and communication platforms
for students, which can greatly reduce the fixed cost and increase
profit margins. We are striving to solve the problem of low
utilization of online English course resources, reduce teaching
costs, change the industry's high-input and high-output business
model, add low-cost foreign teachers, and launching low-cost and
high-profit Philippine foreign teachers' courses to meet the needs
of most students, optimize our operation and reduce corporate
operational risks. Also, we provide diversified online courses
suitable for adult career development to better meet the diverse
learning needs of young people in the Chinese workplace. Students
can learn English while learning other courses that are
prerequisite for their own career development, such as marketing,
management, finance, communication skills, EMBA and other courses.
Within the current dynamic operating environment, we expect to
leverage our market position through our strategic transformations
to drive value for our customers and shareholders."
Operational developments
|
2Q
2021
|
HY
2021
|
Student
enrollments
|
18,442
|
31.3%
|
36,406
|
38.8%
|
Course withdrawal
rate(1) (%)
|
13.51%
|
3.06
ppts
|
13.45%
|
2.56
ppts
|
|
(1) Refers to the
amount of refunds issued in a specific period of time as a
percentage of the sum
of the amount of gross billings and the amount of refunds for such
period.
|
|
March 31,
2021
|
June 30,
2021
|
Number of
self-operated learning centers
|
97
|
(7.6%)*
|
92
|
(5.2%)*
|
Number of franchised
learning centers
|
13
|
-*
|
10
|
(23.1)*
|
|
(* Change compared
to the previous quarter end)
|
Growing online and Junior student enrollment
As of June 30, 2021, the number of
registered users for online courses increased by 19% year-on-year,
up to 1.9 million, as the Company diversified course offerings and
leveraged cross-selling opportunities through offline and online
channels as its learning centers reopened. Supported by investments
in the Junior ELT segments and new product development, the number
of registered junior students for Junior ELT under the "Meten"
brand increased by 240.9% year-on-year as of June 30, 2021.
Continued product innovation
Meten EdtechX continued to invest in product development during
the second quarter of 2021, leveraging the several recently
launched new products across both its offline and online platforms,
which include three new language (Japanese, Spanish and Korean)
products. For the first half of 2021, the Company's gross billings
derived from Japanese, Spanish and Korean language training
services was RMB5.7 million
(US$0.88 million).
The Company plans to launch Meten Junior Growth Centers
("Centers") nationwide and has already opened Centers in
Beijing, Chongqing, Changsha, Nanchang, and Foshan. Currently, there are
five courses offered in the Centers: STEAM (Science, Technology,
Engineering, Arts and Mathematics), handicraft workshop, creative
art, children's drama, and calligraphy. The Company plans to offer
10 courses through the Centers by the end of 2021.
Financial results
Revenues
In the second quarter of 2021, revenue amounted to RMB204.8 million (US$31.7
million), an increase of 8.2% year-on-year from RMB189.3 million in the second quarter of 2020.
In the first half of 2021, revenue amounted to RMB411.3 million (US$63.7
million), an increase of 10.9% year-on-year from
RMB370.9 million in the first half of
2020, primarily as a result of the strong rebound in gross billing
after the impact of COVID-19 faded.
For general adult ELT, revenues increased 38.3% year-on-year, to
RMB79.3 million (US$12.3 million) in the second quarter of 2021
from RMB57.3 million in the second
quarter of 2020. For overseas training services, revenues increased
97.4% year-on-year, to RMB37.0
million (US$5.7 million) in
the second quarter of 2021 from RMB18.7
million in the second quarter of 2020. For general adult
ELT, revenues increased 29.3% year-on-year, to RMB146.3 million (US$22.7
million) in the first half of 2021 from RMB113.1 million in the first half of 2020. For
overseas training services, revenues increased 87.5% year-on-year,
to RMB76.9 million (US$11.9 million) in the first half of 2021 from
RMB41.0 million in the first half of
2020.
For Junior ELT, revenues decreased from RMB31.6 million in the second quarter of 2020 to
RMB23.1 million (US$3.6 million) in the second quarter of 2021,
among which, revenue for Junior ELT under "Meten" brand increased
by 256.3% year-on-year in the second quarter of 2021 to
RMB21.4 million (US$3.3 million). In the second quarter of 2021,
due to regulatory mandates, all off-campus training institutions
suspended their business operations in Beijing, and the revenue for Junior ELT under
"ABC" brand decreased by 93.3% year-on-year. For Junior ELT,
revenues decreased from RMB55.2
million in the first half of 2020 to RMB48.3 million (US$7.5
million) in the first half of 2021, among which, revenue for
Junior ELT under "Meten" brand increased by 269.3% year-on-year in
the first half of 2021 to RMB39.2
million (US$6.1 million). In
the first half of 2021, Junior ELT under "ABC" brand operated only
for a limited period, and as a result, revenue for Junior ELT under
"ABC" brand decreased by 79.4% year-on-year.
For online ELT, revenues decreased 23.1% year-on-year, from
RMB79.2 million in the second quarter
of 2020 to RMB60.9 million
(US$9.4 million) in the second
quarter of 2021. Revenues decreased 15.4% year-on-year, from
RMB156.3 million in the first half of
2020 to RMB132.2 million
(US$20.5 million) in the first half
of 2021. This slight decrease was mainly due to the fact that the
Company's online ELT business reached a peak as a result of the
COVID-19 in the same period last year.
Cost of revenues
The Company's cost of revenues consists primarily of staff
costs, property expenses, depreciation and amortization, and
teaching material costs.
In the second quarter of 2021, cost of revenues increased by
2.1% to RMB138.6 million
(US$21.5 million), from
RMB135.7 million in the second
quarter of 2020. In the first half of 2021, cost of revenues
decreased by 2.3% to RMB274.4 million
(US$42.5 million), from
RMB280.8 million in the first half of
2020.
Gross profit
In the second quarter of 2021, gross profit increased by 23.4%
to RMB66.2 million (US$10.2 million), from RMB53.6 million in the second quarter of 2020. In
the first half of 2021, gross profit increased by 52.0% to
RMB137.0 million (US$21.2 million), from RMB90.1 million in the first half of 2020, due to
the improvement of gross billings and operational
efficiency.
For the second quarter of 2021, gross profit margin increased by
4.0 percentage points to 32.3% from 28.3% for the second quarter of
2020. For the first half of 2021, gross profit margin increased by
9.0 percentage points to 33.3% from 24.3% for the first half of
2020.
Operating expenses
In the second quarter of 2021, selling and marketing expenses
amounted to RMB77.1 million
(US$11.9 million), an increase of
8.9% from RMB70.9 million in the
second quarter of 2020. In the first half of 2021, selling and
marketing expenses amounted to RMB147.5
million (US$22.9 million), an
increase of 5.8% from RMB139.5
million in the first half of
2020.
In the second quarter of 2021, research and development expenses
decreased by 59.3% year-on-year to RMB3.3
million (US$0.5 million), from
RMB8.2 million in the second quarter
of 2020. In the first half of 2021, research and development
expenses decreased by 50.4% year-on-year to RMB7.5 million (US$1.2
million), from RMB15.2 million
in the first half of 2020.
In the second quarter of 2021, general and administrative
expenses decreased by 3.3% year-on-year to RMB63.2 million (US$9.8
million), from RMB65.4 million
in the second quarter of 2020. In the first half of 2021, general
and administrative expenses increased by 10.8% year-on-year to
RMB144.5 million (US$22.4 million), from RMB130.4 million in the first half of 2020. This
decrease was primarily due to an increase in share-based
compensation expenses.
Loss from operations
For the second quarter of 2021, loss from operations was
RMB77.5 million (US$12.0 million), compared to a loss from
operations of RMB90.8 million in the
second quarter of 2020. For the first half of 2021, loss from
operations was RMB162.6 million
(US$25.2 million), compared to a
loss from operations of RMB194.9
million in the first half of 2020.
Net loss
For the second quarter of 2021, net loss was RMB80.3 million (US$12.4 million), compared to a net loss of
RMB93.4 million in the second quarter
of 2020. For the first half of 2021, net loss was RMB169.7 million (US$26.3 million), compared to a net loss of
RMB195.1 million in the first half of
2020.
Cash and cash
equivalents
As of June 30, 2021, Meten EdtechX
had RMB144.2 million (US$22.3 million) of cash and cash equivalents,
compared to RMB90.1 million as of
December 31, 2020.
Outlook
The Company expects to complete the strategic transformation in
the next quarter and upgrade to an online and offline training
organization that provides comprehensive workplace training
services. In addition, the Company intends to actively explore
business opportunities in other industries including
quality-oriented education, medical aesthetics, and VR teaching
products for institutions, so as to lay a stable foundation for the
Company's long-term development.
Exchange Rate
The Company's business is primarily conducted in China and all of the revenues are denominated
in Renminbi ("RMB"). This announcement contains translations of
certain RMB amounts into U.S. dollars ("USD" or "US$") at specified
rates solely for the convenience of the readers. Unless otherwise
noted, all translations from RMB to USD for the second quarter of
2021 are made at the rate of RMB6.4566 to US$1.00, the exchange rate set forth in the H.10
statistical release of the Federal Reserve Board on June 30, 2021, respectively. No representation is
made that the RMB amounts could have been, or could be, converted,
realized or settled into US$ at that rate on June 30 2021, as the case may be, or at any other
rate.
About Non-GAAP Financial Measures
Meten EdtechX's consolidated financial results are presented in
accordance with GAAP. However, to provide meaningful supplemental
information regarding its performance, Meten EdtechX adopts the
following measures which are defined as non-GAAP financial measures
by the SEC:
- EBITDA: calculated by subtracting net interest
income/loss and adding back income tax expense and non-cash expense
of depreciation and amortization to a firm's net
income/(loss).
- Adjusted EBITDA: calculated by removing certain one-off,
irregular and/or non-recurring items from EBITDA such as
offering expenses and share-based compensation expenses.
- Adjusted net (loss)/income: calculated by adding back
certain one-off, irregular and/or non-recurring items to net
income/loss such as offering expenses and 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.
About Meten EdtechX
Meten EdtechX is one of the leading ELT service providers in
China, delivering English language
and skills training for Chinese students and professionals. Through
a sophisticated digital platform and a nationwide network of
learning centers, the Company provides its services under three
industry-leading brands: Meten (adult and junior ELT services), ABC
(primarily junior ELT services) and Likeshuo (online ELT). The
Company offers superior teaching quality and student satisfaction,
served by cutting edge technology deployed across its business,
including AI-driven centralized teaching and management systems
that record and analyze learning processes in real time.
The Company is committed to improving the overall English
language competence of the Chinese population to keep abreast of
the rapid development of globalization. Its experienced management
is focused on further developing its digital platform and expanding
its network of learning centers to deliver a continually evolving
service offerings to a growing number of students across
China.
For more information, please
visit: https://investor.metenedu-edtechx.com.
Safe Harbor Statement
This announcement contains forward-looking statements that
involve risks and uncertainties. These statements are made under
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," "future," "intends," "plans," "believes,"
"estimates" and similar statements. Statements that are not
historical facts, including statements about the Company's beliefs
and expectations, are forward-looking statements. 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: the continuing impact of the COVID-19
pandemic and the emergence of new variants, our ability to attract
students without a significant decrease in course fees; our ability
to continue to hire, train and retain qualified teachers; our
ability to maintain and enhance our brands; our ability to
effectively and efficiently manage the expansion of our school
network and successfully execute our growth strategy; the outcome
of ongoing, or any future, litigation or arbitration, including
those relating to copyright and other intellectual property rights;
competition in the English language training sector in China;
changes in our revenues and certain cost or expense items as a
percentage of our revenues; the expected growth of the Chinese
English language training and private education market; Chinese
governmental policies relating to private educational services and
providers of such services; health epidemics and other outbreaks in
China; and general economic conditions in China. Further
information regarding these and other risks is included in our
annual report on Form 20-F and other documents filed with the
Securities and Exchange Commission. The Company does not undertake
any obligation to update any forward-looking statement, except as
required under applicable law. All information provided in this
press release and in the attachments is as of the date of this
press release, and the Company undertakes no duty to update such
information, except as required under applicable law.
For investor and media inquiries, please contact:
Ascent Investor Relations LLC
Tina Xiao
+1 917-609-0333
tina.xiao@ascent-ir.com
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(The following financial data
has not been reviewed by the auditor)
|
|
|
2020
|
|
2021
|
|
Q2
|
H1
|
|
Q2
|
H1
|
|
RMB'000
|
RMB'000
|
|
RMB'000
|
US$'000
|
RMB'000
|
US$'000
|
Revenues
|
189,328
|
370,909
|
|
204,765
|
31,714
|
411,319
|
63,705
|
Cost of
revenues
|
(135,727)
|
(280,775)
|
|
(138,599)
|
(21,466)
|
(274,357)
|
(42,492)
|
|
|
|
|
|
|
|
|
Gross
profit
|
53,601
|
90,134
|
|
66,166
|
10,248
|
136,962
|
21,213
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
(70,862)
|
(139,466)
|
|
(77,145)
|
(11,948)
|
(147,543)
|
(22,852)
|
General and
administrative expenses
|
(65,391)
|
(130,415)
|
|
(63,240)
|
(9,795)
|
(144,511)
|
(22,382)
|
Research and
development
expenses
|
(8,176)
|
(15,182)
|
|
(3,327)
|
(515)
|
(7,526)
|
(1,166)
|
|
|
|
|
|
|
|
|
(Loss)/income from
operations
|
(90,828)
|
(194,929)
|
|
(77,546)
|
(12,010)
|
(162,618)
|
(25,187)
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
Interest
income
|
149
|
282
|
|
63
|
10
|
173
|
27
|
Interest
expenses
|
(1,219)
|
(2,284)
|
|
(1,588)
|
(246)
|
(3,475)
|
(538)
|
Foreign currency
exchange
gain/(loss), net
|
466
|
258
|
|
(631)
|
(98)
|
(1,054)
|
(163)
|
Gains/(losses) on
disposal and
closure of subsidiaries and
branches
|
-
|
-
|
|
(3,439)
|
(533)
|
(5,495)
|
(851)
|
Gains on Short-term
investments
|
|
|
|
-
|
-
|
-
|
|
Government
grants
|
10,453
|
12,879
|
|
1,728
|
268
|
6,369
|
986
|
Equity in
income/(loss) on equity
method investments
|
1,350
|
107
|
|
245
|
38
|
1,449
|
224
|
Others,
net
|
(10,880)
|
(11,095)
|
|
(940)
|
(146)
|
(1,735)
|
(269)
|
|
|
|
|
|
|
|
|
(Loss)/income
before income tax
|
(90,509)
|
(194,782)
|
|
(82,108)
|
(12,717)
|
(166,386)
|
(25,771)
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(2,858)
|
(308)
|
|
1,796
|
278
|
(3,267)
|
(506)
|
|
|
|
|
|
|
|
|
Net
(loss)/income
|
(93,367)
|
(195,090)
|
|
(80,312)
|
(12,439)
|
(169,653)
|
(26,277)
|
|
|
|
|
|
|
|
|
Less: Net
(loss)/income
attributable to non-controlling
interests
|
2,026
|
3,437
|
|
(2,244)
|
(348)
|
(4,809)
|
(745)
|
|
|
|
|
|
|
|
|
Net (loss)/income
attributable to
owners of the Company
|
(95,393)
|
(198,527)
|
|
(78,068)
|
(12,091)
|
(164,844)
|
(25,532)
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
2,964
|
4,577
|
|
4,594
|
712
|
38,358
|
5,941
|
Warrant
financing
|
-
|
-
|
|
-
|
-
|
2,404
|
372
|
|
|
|
|
|
|
|
|
Adjusted Net
(loss)/income
|
(90,403)
|
(190,513)
|
|
(75,718)
|
(11,727)
|
(128,891)
|
(19,964)
|
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SOURCE Meten EdtechX Education Group Ltd.