Skillful Craftsman(US:EDTK)2020-08-17 23:28Revenue and Growth - Revenue from online education services accounted for 99.3%, 98.6%, and 98.7% of total revenue for the fiscal years ended March 31, 2020, 2019, and 2018 respectively[227]. - Revenue reached $14.9 million in fiscal year 2018, $24.7 million in fiscal year 2019, and $28.6 million in fiscal year 2020, indicating a year-over-year growth of 65.6% from 2018 to 2019 and 15.7% from 2019 to 2020[231]. - Revenue increased from $14.9 million for the fiscal year ended March 31, 2018 to $24.7 million for the fiscal year ended March 31, 2019, representing an increase of $9.8 million, or 65.4%[382]. - Revenue rose from $24.7 million for the fiscal year ended March 31, 2019, to $28.6 million for the fiscal year ended March 31, 2020, an increase of $3.93 million or 16%[375]. - The size of China's online education market was valued at approximately RMB 313.6 billion ($44.9 billion) in 2019 and is expected to grow to RMB 543.4 billion ($80.7 billion) by 2022[341]. - The online vocational education market in China grew from RMB 36.8 billion ($5.5 billion) in 2015 to RMB 76.8 billion ($11.4 billion) in 2018, representing a 32% increase[341]. Membership and User Growth - The number of registered members increased from 0.69 million as of December 31, 2014 to 68.5 million as of March 31, 2020, representing a growth of approximately 9,800%[231]. - The number of registered members increased from 50.8 million as of March 31, 2019 to 68.5 million as of March 31, 2020, while fee-paying members grew from 2.3 million to 3.09 million in the same period[343]. - The number of fee-paying members increased from 49,936 as of December 31, 2014 to 3.1 million as of March 31, 2020, reflecting a growth of over 6,100%[231]. - The number of fee-paying members increased from approximately 2.3 million as of March 31, 2019, to approximately 3.1 million as of March 31, 2020, representing a growth rate of 35%[367][368]. - As of June 30, 2020, the number of registered members reached approximately 72.66 million, a 6% increase compared to March 31, 2020[347]. Course Offerings and Educational Platforms - The company currently offers approximately 407 vocational training courses covering various subjects such as mechanics, electronics, auto repair, and construction[227]. - The vocational training platform offers 407 courses designed to enhance vocational skills, with an annual fee of RMB 100 (approximately $14.85) per member[247][251]. - The company operates three online education platforms: lifelong education public service platform, online vocational training platform, and virtual simulation experimental platform, with a total of approximately 3.1 million registered members on the vocational training platform[243][251]. - The company plans to expand its course offerings in response to the PRC Ministry of Education's "1+X" policy, focusing on four vocational training subjects including front-end web development and auto repair[239]. Financial Performance and Expenses - Net profit increased from $8.7 million for the fiscal year ended March 31, 2019, to $9.98 million for the fiscal year ended March 31, 2020, reflecting a growth of $1.3 million or 15%[381]. - Cost of revenue increased from $9.5 million in the year ended March 31, 2019, to $11.8 million in the year ended March 31, 2020, representing a rise of $2.3 million or 25%[376]. - Operating expenses decreased from $3.7 million for the fiscal year ended March 31, 2019, to $3.6 million for the fiscal year ended March 31, 2020, a decrease of $0.17 million or 5%[377]. - Sales and marketing expenses decreased by $0.3 million or 17%, while general and administrative expenses increased by $0.14 million or 7%[378]. - Cash inflow from operating activities for the year ended March 31, 2020 was $11.48 million, a decrease of $8.8 million from $20.3 million for the year ended March 31, 2019[398]. Management and Operations - The company has a strong management team with over 20 years of experience in the technology industry, led by founder and CEO Mr. Xiaofeng Gao[237]. - The company maintains a total of 42 employees, categorized into research and development, marketing, finance and accounting, and general administration[267]. - The technology team consists of 16 members, focusing on research and development, with most members having over 10 years of experience in online platform development and big data applications[262]. Regulatory Environment - The company must comply with various regulations governing online education and internet content provision, ensuring adherence to licensing and content standards[297]. - The administrative license for "online education schools" was abolished, allowing Craftsman Wuxi and Wuxi Wangdao to operate without government accreditation for degrees or certifications[299]. - The Ministry of Education issued guidance promoting the establishment of online education institutions and high-quality education services, indicating a supportive regulatory environment[300]. - Foreign investment in the company's sector is classified as "restricted," requiring joint ventures with majority interests held by PRC partners[289]. Competitive Landscape - The vocational education services market in China is highly competitive, with numerous large and small providers vying for student enrollment[273]. - Key competitive factors include the quality of course offerings, the ability to operate a cloud platform, access to experienced teachers, and alignment of services to student needs[274]. - The company believes it is well-positioned to compete due to its innovative education platform and experienced management team, despite facing competition from established players with greater resources[275]. Future Plans and Strategies - The company plans to expand its course offerings and enhance its technology infrastructure to meet growing demand and improve operational efficiency[358]. - The company is preparing to purchase new courseware from higher institutions to meet customer needs[412]. - The company plans to strengthen research and development activities in virtual simulation for high-end manufacturing, automotive maintenance, and new life entertainment sectors[412]. Miscellaneous - The company does not maintain liability or property insurance, nor business interruption insurance, aligning with industry practices in China[278]. - The company is not currently involved in any legal proceedings that could materially affect its business or financial condition[280]. - There were no off-balance sheet arrangements or financial guarantees that could materially affect the company's financial condition or results of operations for the years ended March 31, 2019, and 2020[413].