51Talk(US:COE)2019-03-15 13:49Financial Data and Key Metrics Changes - The company reported record high Q4 gross billing of RMB503 million, representing a 27.9% year-over-year growth [5] - Total annual net revenues for 2018 were RMB1.1 billion, with gross billing of RMB1.7 billion, showing improved gross margins of 64% and a narrowed net loss of RMB164 million compared to 2017 [8][9] - Net revenues for Q4 2018 were RMB298.1 million, a 14.4% increase from RMB260.6 million in the same quarter last year [10] - The number of active students increased by 22.1% year-over-year to approximately 213,900 in Q4 2018 [10] Business Line Data and Key Metrics Changes - Gross billings from K-12 mass-market one-on-one offerings increased 63% year-over-year to RMB365.7 million [9] - Gross billings from K-12 small class offerings increased 127% year-over-year to RMB60.6 million [9] - Gross billings from adult offerings decreased 28.9% year-over-year to RMB55 million, while K-12 American Academy one-on-one offerings declined 66.3% year-over-year to RMB21.9 million [9] Market Data and Key Metrics Changes - The company successfully gained stronger footholds in non-tier-one cities, which accounted for 69.7% of K-12 mass-market one-on-one gross billings [6] - The company has over 18,000 teachers in the Philippines, which remains a key part of its offering [7] Company Strategy and Development Direction - The company plans to make its offerings more accessible in 2019, focusing on high-quality live online English courses in non-tier-one cities [6] - The engagement of a popular brand spokesperson aims to increase accessibility to English education for students [6] - The company will continue to monitor online education regulations and remains optimistic about long-term benefits for the industry [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the K-12 mass-market one-on-one offerings, driven by strong performance in non-tier cities and referral business [22] - The company anticipates a seasonal decline in Q1 2019 but expects stronger performance in subsequent quarters [25] - For Q1 2019, the company expects net revenues between RMB300 million and RMB305 million, representing an increase of approximately 14.3% to 16.2% from the same quarter last year [17] Other Important Information - The company reported a total cash position of RMB712.1 million as of December 31, 2018, compared to RMB623.4 million a year earlier [16] - Deferred revenues increased to RMB1.7 billion as of December 31, 2018, from RMB1.2 billion a year earlier [17] Q&A Session Summary Question: Factors leading to growth in one-on-one class offering - Management noted strong growth in K-12 mass-market one-on-one offerings, particularly in non-tier cities and through referral business [22] Question: Strategy for small class offering - The company is restructuring its small class offerings and focusing on improving product quality and operational efficiencies rather than aggressive growth [24] Question: Factors influencing guidance for one-on-one class offering - Management explained that seasonal trends typically lead to weaker Q1 performance, with expectations for better sequential decline compared to 2018 [25]