51Talk Reports Strong Q2 Growth and Unveils Global Expansion Plans

Earnings call: 51Talk reports strong Q2 growth, eyes global expansion By Investing.com

51Talk Online Education Group (NYSE: COE) has reported a robust performance in the second quarter of 2024, with net revenues reaching $11 million, a 75.1% increase from the previous year. The company's growth has been fueled by a rise in active students and lesson consumption. Despite the significant revenue growth, 51Talk experienced a net loss of $1.3 million, although this was a 56.5% decrease from the same quarter last year. The company is optimistic about its future, citing strategic investments and global expansion efforts as key drivers of its continued momentum. 51Talk's second quarter earnings call highlighted the company's strong revenue growth and its strategic focus on global expansion and technological integration. With the use of AI and a focus on localizing its offerings, 51Talk is positioning itself to capture significant market share in the global online education sector. Despite a net loss, the company's reduced deficit compared to the previous year and optimistic guidance for the next quarter reflect confidence in its business model and market strategy. As 51Talk continues to navigate the competitive landscape of online education, investors and analysts will be closely monitoring its progress in international markets and the effectiveness of its AI-enabled educational platform. 51Talk Online Education Group's (NYSE: COE) recent earnings report showcased significant revenue growth and a promising increase in active students. To provide further context to these results, here are some insights based on the latest InvestingPro data and tips: InvestingPro Tips highlight several key points that may be of interest to investors: 1. Analysts anticipate sales growth in the current year, which is in line with the company's positive revenue figures and expectations for sustained momentum. 2. 51Talk's significant return over the last week of 7.66% could signal investor confidence following the earnings report. For those looking for more in-depth analysis, there are additional InvestingPro Tips available at: https://www.investing.com/pro/COE. These tips can provide further guidance on the company's financial health and stock performance. In summary, the InvestingPro data and tips provide a deeper understanding of 51Talk's financial position and market performance, complementing the information presented in the earnings report and offering valuable insights for investors. Operator: Hello, ladies and gentlemen. Thank you for standing by for 51Talk's Online Education Group's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David. David Chung: Hello, everyone, and welcome to the second quarter 2024 earnings conference call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session. Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead. Jack Huang: Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. We have achieved strong growth in Q2, exceeding our guidance, and anticipate sustained momentum in the foreseeable future, as reflected in our Q3 guidance. Our strategic investments across a diverse portfolio of markets are yielding positive results, propelling us towards our objective of becoming a globally leading EdTech company. Through our localization efforts, we have gained a deeper understanding of individual markets, allowing us to meet specific local needs. This approach has improved our product market fit. Additionally, we actively explore new market opportunities that align with our strategic direction and existing product offerings. Our strategy hinges on global expansion based on local needs and platform strength enabled by AI. We make targeted investments to enhance team efficiency and local customer experience, aiming to drive higher retention rates and more customer referrals. With that, I will now turn the call over to our CFO, Cindy Tang Cindy Tang: Thank you, Jack. Now let me walk you through our second quarter financial details. Second quarter net revenues were US$11 million, a 75.1% increase from the same quarter last year largely driven by the increase of active students with attended lesson consumption. Gross margin for the second quarter was 78.1%. Gross billings grew by 61.3% from the same quarter last year to US$15.9 million. Q2 operating expenses were US$11 million, an increase of 39.7% compared to the same quarter last year. Specifically, this has been driven by Q2 sales and marketing expenses of US$7.3 million, a 43.6% increase from the same quarter last year due to higher sales personnel costs related to increases in a number of sales and marketing personnel. Q2 product development expenses were US$0.9 million, a 22.6% increase from the same quarter last year. Finally Q2 general and administrative expenses were US$2.8 million, a 35.8% increase from the same quarter last year. Overall Q2 operating loss was US$2.4 million, while net loss was US$1.3 million, an 18.1% and 56.5% decrease from the same quarter last year, respectively. Due to GAAP and non-GAAP earnings per ADS were negative US$0.22 and US$0.18, respectively. The company's total cash, cash equivalents and time deposits were US$21 million at the end of the second quarter. Fees including deposits in third party payment channels, et cetera, the total balance would have been US$24.2 million. Advances from students were US$34.5 million at the end of the second quarter. Looking forward to the third quarter of 2024, we currently expect the net gross billings to be between US$17 million and US$18 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead. Operator: [Operator Instructions] Today's first question comes from [John Banks] at B&G Capital Management. Please go ahead. Unidentified Analyst: Hi, thanks for letting me ask a question. Congratulations on a great quarter. Just a quick question on the new market you guys are going after. I know originally you guys were in China. It was 100% there, and the tutors were mostly Philippines. So then you went to Asia, but now it looks like you're spreading out in Japan and the Middle East. So I guess my question, when you go to these localized markets, are you using AI? Are you using local teachers and just try to explain a little on the new market you guys are looking to enter or are you looking to enter every market going forward? Thank you. Jack Huang: Okay. Thank you very much for your question. Okay. Obviously, you have done a lot of research on our markets. Yes. So currently we are - our new markets include Southeast Asia, Japan includes the Middle East market. And right now, our core product - our core product is the foreign tutor [indiscernible] fitness model. Mostly we are using the filipino features. However, we are also utilizing the AI technology to enable the Filipino tutors as well. So the Filipino tutors can use - can utilize the AI technology to make the lesson to be more interactive, to be more personalized. And also we are using AI technology to make the - to do the pre-lesson - the preview of the lesson and review of the lesson. And we are utilizing AI technology a lot. So basically understanding our business model to be the model we were using in China, which means the Filipino tutors. However, we are utilizing the new AI technology to be part of the solution. Unidentified Analyst: Excellent. Thank you. That was perfect. Thank you. You kind of broke it down. My final question, just because I know it was interesting because you guys basically did the same model in China, then what happened there and you moved it to overseas. So one of the questions I was thinking about is, like, I think in China, you guys got to close to about 250 million to 300 million gross billings. I was wondering when you left China, like, what the size of the market would be. Do you have a feeling like the markets as big or bigger than China, obviously, that you can get to in the next, say, five to 10 years? Jack Huang: Yes, definitely. Actually, we are very confident about the market size, the outside of China. We believe that - we believe that it's not only China, it's all of the developing countries, like Thailand, like Malaysia, like Vietnam, and also some developed countries, like Japan, like Korea. They have the demand. And we believe that there are less competitors there comparing with heavily competing market in China. I believe, you know that. So we definitely believe that the market size is at least as big as China market outside of China because if you look at the population and the economy scale. Right. And considering the competition situation, we believe that we can, even if we look at five to 10 years looking forward we believe that we can even we are optimistic about the market size we can achieve in the next five to 10 years. Unidentified Analyst: Excellent. Thank you for detailed answers on all my questions. Great quarter and hopefully the momentum keeps coming for the next three to five years. Thank you. Jack Huang: Thank you very much. Operator: Thank you. [Operator Instructions] Well, as we are reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Mr. David, please go ahead. David Chung: Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website. Thank you. Operator: Thank you, sir. And this concludes todays' conference call. We thank you all for attending today's presentation. You may now disconnect your lines. And have a wonderful day.

51Talk Online Education Group (COE) Q2 2024 Earnings Call Transcript

Hello, ladies and gentlemen. Thank you for standing by for 51Talk's Online Education Group's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. David Chung, Investor Relations for the company. Please go ahead, David. David Chung Hello, everyone, and welcome to the second quarter 2024 earnings conference call of 51Talk. The company's results were issued by Newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company's distribution list by visiting ir.51talk.com. Mr. Jack Huang, our CEO; and Ms. Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q&A session. Before we continue, please note that the discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company's Form 20-F and other public filings as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. 51Talk's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Jack Huang. Jack, please go ahead. Jack Huang Thank you, David. Hello, everyone. Thank you very much for joining our conference call today. We have achieved strong growth in Q2, exceeding our guidance, and anticipate sustained momentum in the foreseeable future, as reflected in our Q3 guidance. Our strategic investments across a diverse portfolio of markets are yielding positive results, propelling us towards our objective of becoming a globally leading EdTech company. Through our localization efforts, we have gained a deeper understanding of individual markets, allowing us to meet specific local needs. This approach has improved our product market fit. Additionally, we actively explore new market opportunities that align with our strategic direction and existing product offerings. Our strategy hinges on global expansion based on local needs and platform strength enabled by AI. We make targeted investments to enhance team efficiency and local customer experience, aiming to drive higher retention rates and more customer referrals. With that, I will now turn the call over to our CFO, Cindy Tang Now let me walk you through our second quarter financial details. Second quarter net revenues were US$11 million, a 75.1% increase from the same quarter last year largely driven by the increase of active students with attended lesson consumption. Gross margin for the second quarter was 78.1%. Gross billings grew by 61.3% from the same quarter last year to US$15.9 million. Q2 operating expenses were US$11 million, an increase of 39.7% compared to the same quarter last year. Specifically, this has been driven by Q2 sales and marketing expenses of US$7.3 million, a 43.6% increase from the same quarter last year due to higher sales personnel costs related to increases in a number of sales and marketing personnel. Q2 product development expenses were US$0.9 million, a 22.6% increase from the same quarter last year. Finally Q2 general and administrative expenses were US$2.8 million, a 35.8% increase from the same quarter last year. Overall Q2 operating loss was US$2.4 million, while net loss was US$1.3 million, an 18.1% and 56.5% decrease from the same quarter last year, respectively. Due to GAAP and non-GAAP earnings per ADS were negative US$0.22 and US$0.18, respectively. The company's total cash, cash equivalents and time deposits were US$21 million at the end of the second quarter. Fees including deposits in third party payment channels, et cetera, the total balance would have been US$24.2 million. Advances from students were US$34.5 million at the end of the second quarter. Looking forward to the third quarter of 2024, we currently expect the net gross billings to be between US$17 million and US$18 million. The above outlook is based on our current market conditions and reflect the company's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks. We will now open the line for questions. Operator, please go ahead. [Operator Instructions] Today's first question comes from [John Banks] at B&G Capital Management. Please go ahead. Unidentified Analyst Hi, thanks for letting me ask a question. Congratulations on a great quarter. Just a quick question on the new market you guys are going after. I know originally you guys were in China. It was 100% there, and the tutors were mostly Philippines. So then you went to Asia, but now it looks like you're spreading out in Japan and the Middle East. So I guess my question, when you go to these localized markets, are you using AI? Are you using local teachers and just try to explain a little on the new market you guys are looking to enter or are you looking to enter every market going forward? Thank you. Jack Huang Okay. Thank you very much for your question. Okay. Obviously, you have done a lot of research on our markets. Yes. So currently we are - our new markets include Southeast Asia, Japan includes the Middle East market. And right now, our core product - our core product is the foreign tutor [indiscernible] fitness model. Mostly we are using the filipino features. However, we are also utilizing the AI technology to enable the Filipino tutors as well. So the Filipino tutors can use - can utilize the AI technology to make the lesson to be more interactive, to be more personalized. And also we are using AI technology to make the - to do the pre-lesson - the preview of the lesson and review of the lesson. And we are utilizing AI technology a lot. So basically understanding our business model to be the model we were using in China, which means the Filipino tutors. However, we are utilizing the new AI technology to be part of the solution. Unidentified Analyst Excellent. Thank you. That was perfect. Thank you. You kind of broke it down. My final question, just because I know it was interesting because you guys basically did the same model in China, then what happened there and you moved it to overseas. So one of the questions I was thinking about is, like, I think in China, you guys got to close to about 250 million to 300 million gross billings. I was wondering when you left China, like, what the size of the market would be. Do you have a feeling like the markets as big or bigger than China, obviously, that you can get to in the next, say, five to 10 years? Jack Huang Yes, definitely. Actually, we are very confident about the market size, the outside of China. We believe that - we believe that it's not only China, it's all of the developing countries, like Thailand, like Malaysia, like Vietnam, and also some developed countries, like Japan, like Korea. They have the demand. And we believe that there are less competitors there comparing with heavily competing market in China. I believe, you know that. So we definitely believe that the market size is at least as big as China market outside of China because if you look at the population and the economy scale. Right. And considering the competition situation, we believe that we can, even if we look at five to 10 years looking forward we believe that we can even we are optimistic about the market size we can achieve in the next five to 10 years. Unidentified Analyst Excellent. Thank you for detailed answers on all my questions. Great quarter and hopefully the momentum keeps coming for the next three to five years. Thank you. Thank you. [Operator Instructions] Well, as we are reaching the end of our conference call, I'd like to turn the call back over to the company for closing remarks. Mr. David, please go ahead. David Chung Thank you once again for joining us today. If you have further questions, please contact 51Talk's Investor Relations through the contact information provided on our website. Thank you. Thank you, sir. And this concludes todays' conference call. We thank you all for attending today's presentation. You may now disconnect your lines. And have a wonderful day.

51Talk Online Education Group Announces Second Quarter 2024 Results By Investing.com

, /PRNewswire/ -- 51Talk Online Education Group ("51Talk" or the "Company") (NYSE American: COE), a global online education platform with core expertise in English education, announced its unaudited results for the second quarter ended . Second Quarter 2024 Financial and Operating Highlights "We have achieved strong growth in Q2, exceeding our Q2 guidance, and anticipate sustained momentum in the foreseeable future, as reflected in our Q3 guidance. Our strategic investments across a diverse portfolio of markets are yielding positive results, propelling us towards our objective of becoming a globally leading EdTech company." stated , Founder, Chairman, and Chief Executive Officer of 51Talk. "Through our localization efforts, we have gained a deeper understanding of individual markets, allowing us to meet specific local needs. This approach has improved our product market fit. Additionally, we actively explore new market opportunities that align with our strategic direction and existing product offerings." "Our strategy hinges on global expansion based on local needs and platform strength enabled by AI. We make targeted investments to enhance team efficiency and local customer experience, aiming to drive higher retention rates and more customer referrals." concluded. Net revenues for the second quarter of 2024 were .0 million, a 75.1% increase from for the same quarter last year. The number of active students with attended lesson consumption was approximately 54,400 in the second quarter of 2024, a 83.2% increase from 29,700 for the same quarter last year. Cost of revenues for the second quarter of 2024 was , a 77.3% increase from for the same quarter last year. The increase was primarily due to the increase in total service fees paid to teachers, mainly resulting from an increased number of paid lessons. Gross profit for the second quarter of 2024 was , a 74.5% increase from for the same quarter last year. Gross margin for the second quarter of 2024 was 78.1%, compared with 78.4% for the same quarter last year. Operating Expenses Total operating expenses for the second quarter of 2024 were .0 million, a 39.7% increase from .9 million for the same quarter last year. The increase was mainly due to the increase in sales and marketing expenses. Sales and marketing expenses for the second quarter of 2024 were , a 43.6% increase from for the same quarter last year. The increase was mainly due to higher sales personnel costs related to increases in the number of sales and marketing personnel. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for the second quarter of 2024 were , a 44.0% increase from for the same quarter last year. Product development expenses for the second quarter of 2024 were , a 22.6% increase from .7 million for the same quarter last year. The increase was primarily due to higher product development personnel costs. Excluding share-based compensation expenses, non-GAAP product development expenses for the second quarter of 2024 were , a 25.7% increase from for the same quarter last year. General and administrative expenses for the second quarter of 2024 were , a 35.8% increase from .1 million for the same quarter last year. The increase was primarily due to higher general and administrative personnel costs. Excluding share-based compensation expenses, non-GAAP general and administrative expenses for the second quarter of 2024 were .6 million, a 35.4% increase from for the same quarter last year. Net loss attributable to the Company's ordinary shareholders Basic and diluted net loss per share attributable to ordinary shareholders for the second quarter of 2024 was , compared with basic and diluted net loss per share of .01 for the same quarter last year. Excluding share-based compensation expenses of , non-GAAP basic and diluted net loss per share attributable to ordinary shareholders for the second quarter of 2024 was , compared with non-GAAP basic and diluted net loss per share attributable to ordinary shareholders of .01 for the same quarter last year. Basic and diluted net loss per American depositary share ("ADS") attributable to ordinary shareholders for the second quarter of 2024 was , compared with basic and diluted net loss per ADS of for the same quarter last year. Each ADS represents 60 Class A ordinary shares. Excluding share-based compensation expenses of , non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders for the second quarter of 2024 was , compared with non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders of .48 for the same quarter last year. For the third quarter of 2024, the Company currently expects net gross billings to be between and , which would represent a sequential growth of 7.2% to 13.5%. The foregoing outlook is based on current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. Dial-in details for the earnings conference call are as follows: Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for "51Talk Online Education Group." Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.51talk.com. 51Talk Online Education Group (NYSE American: COE) is a global online education platform with core expertise in English education. The Company's mission is to make quality education accessible and affordable. The Company's online and mobile education platforms enable students to take live interactive English lessons, on demand. The Company connects its students with a large pool of highly qualified teachers that it assembled using a shared economy approach, and employs student and teacher feedback and data analytics to deliver a personalized learning experience to its students. Use of Non-GAAP Financial Measures In evaluating its business, 51Talk considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP operating expenses, non-GAAP operating income/(loss), non-GAAP net income/(loss), non-GAAP net income/(loss) attributable to ordinary shareholders, and non-GAAP net income/(loss) attributable to ordinary shareholders per share and per ADS. To present each of these non-GAAP measures, the Company excludes 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. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this press release. 51Talk believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. 51Talk believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to 51Talk's historical performance. 51Talk computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. 51Talk believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation expenses that have been and will continue to be for the foreseeable future a significant recurring expense in the 51Talk's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this press release provides more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures. Safe Harbor Statement This press release contains statements that may constitute "forward-looking" statements pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will", "expects", "anticipates", "aims", "future", "intends", "plans", "believes", "estimates", "likely to" and similar statements. Among other things, 51Talk's quotations from management in this announcement, as well as 51Talk's strategic and operational plans, contain forward-looking statements. 51Talk may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about 51Talk's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. 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: 51Talk's goals and strategies; 51Talk's expectations regarding demand for and market acceptance of its brand and platform; 51Talk's ability to retain and increase its student enrollment; 51Talk's ability to offer new courses; 51Talk's ability to engage, train and retain new teachers; 51Talk's future business development, results of operations and financial condition; 51Talk's ability to maintain and improve infrastructure necessary to operate its education platform; competition in the online education industry in its international markets; the expected growth of, and trends in, the markets for 51Talk's course offerings in its international markets; relevant government policies and regulations relating to 51Talk's corporate structure, business and industry; general economic and business condition in , its international markets and elsewhere; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in 51Talk's filings with the SEC. All information provided in this press release is as of the date of this press release, and 51Talk does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

51Talk Online Education Group Announces Second Quarter 2024 Results - 51 Talk Online Education (AMEX:COE)

SINGAPORE, Aug. 23, 2024 /PRNewswire/ -- 51Talk Online Education Group ("51Talk" or the "Company") COE, a global online education platform with core expertise in English education, announced its unaudited results for the second quarter ended June 30, 2024. Second Quarter 2024 Financial and Operating Highlights Gross billings1 for the second quarter of 2024 were US$15.9 million, a 61.3% growth from the second quarter of 2023. Net revenues were US$11.0 million for the second quarter of 2024, a 75.1% increase from US$6.3 million for the second quarter of 2023. The number of quarterly active students with attended lesson consumption was approximately 54,400 in the second quarter of 2024, representing a 83.2% increase from approximately 29,700 for the second quarter of 2023. Key Financial and Operating Data For the three months ended June 30, June 30, Y-o-Y 2023 2024 Change Net Revenues (in US$ millions) 6.3 11.0 75.1 % Gross Margin 78.4 % 78.1 % -0.3ppt Gross Billings (in US$ millions) 9.8 15.9 61.3 % Active students with attended lesson consumption2 (in thousands) 29.7 54.4 83.2 % "We have achieved strong growth in Q2, exceeding our Q2 guidance, and anticipate sustained momentum in the foreseeable future, as reflected in our Q3 guidance. Our strategic investments across a diverse portfolio of markets are yielding positive results, propelling us towards our objective of becoming a globally leading EdTech company." stated Jack Jiajia Huang, Founder, Chairman, and Chief Executive Officer of 51Talk. "Through our localization efforts, we have gained a deeper understanding of individual markets, allowing us to meet specific local needs. This approach has improved our product market fit. Additionally, we actively explore new market opportunities that align with our strategic direction and existing product offerings." "Our strategy hinges on global expansion based on local needs and platform strength enabled by AI. We make targeted investments to enhance team efficiency and local customer experience, aiming to drive higher retention rates and more customer referrals." Jack Jiajia Huang concluded. 1 Gross billings for a specific period, which is one of the Company's key operating data, is defined as the total amount of cash received and receivable from third party payment platforms for the sale of course packages and services in such period, net of the total amount of refunds in such period. The gross billings data included herein was from the Company's business system and converted with quarterly corresponding exchange rate, which may lead to differences with bank records 2 An "active student with attended lesson consumption" for a given period refers to a student who attended at least one paid lesson, excluding those students who only attended paid live broadcasting lessons or trial lessons. Second Quarter 2024 Financial Results Net Revenues and Gross Margin Net revenues for the second quarter of 2024 were US$11.0 million, a 75.1% increase from US$6.3 million for the same quarter last year. The number of active students with attended lesson consumption was approximately 54,400 in the second quarter of 2024, a 83.2% increase from 29,700 for the same quarter last year. Cost of revenues for the second quarter of 2024 was US$2.4 million, a 77.3% increase from US$1.4 million for the same quarter last year. The increase was primarily due to the increase in total service fees paid to teachers, mainly resulting from an increased number of paid lessons. Gross profit for the second quarter of 2024 was US$8.6 million, a 74.5% increase from US$4.9 million for the same quarter last year. Gross margin for the second quarter of 2024 was 78.1%, compared with 78.4% for the same quarter last year. Operating Expenses Total operating expenses for the second quarter of 2024 were US$11.0 million, a 39.7% increase from US$7.9 million for the same quarter last year. The increase was mainly due to the increase in sales and marketing expenses. Sales and marketing expenses for the second quarter of 2024 were US$7.3 million, a 43.6% increase from US$5.1 million for the same quarter last year. The increase was mainly due to higher sales personnel costs related to increases in the number of sales and marketing personnel. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for the second quarter of 2024 were US$7.3 million, a 44.0% increase from US$5.1 million for the same quarter last year. Product development expenses for the second quarter of 2024 were US$0.9 million, a 22.6% increase from US$0.7 million for the same quarter last year. The increase was primarily due to higher product development personnel costs. Excluding share-based compensation expenses, non-GAAP product development expenses for the second quarter of 2024 were US$0.8 million, a 25.7% increase from US$0.7 million for the same quarter last year. General and administrative expenses for the second quarter of 2024 were US$2.8 million, a 35.8% increase from US$2.1 million for the same quarter last year. The increase was primarily due to higher general and administrative personnel costs. Excluding share-based compensation expenses, non-GAAP general and administrative expenses for the second quarter of 2024 were US$2.6 million, a 35.4% increase from US$1.9 million for the same quarter last year. Loss from Operations Operating loss for the second quarter of 2024 was US$2.4 million, compared with operating loss of US$3.0 million for the same quarter last year. Non-GAAP operating loss for the second quarter of 2024 was US$2.2 million, compared with non-GAAP operating loss of US$2.8 million for the same quarter last year. Net loss attributable to the Company's ordinary shareholders Net loss attributable to the Company's ordinary shareholders for the second quarter of 2024 was US$1.2 million, compared with net loss of US$2.9 million for the same quarter last year. Excluding share-based compensation expenses of US$0.2 million, non-GAAP net loss for the second quarter of 2024 was US$1.0 million, compared with non-GAAP net loss of US$2.7 million for the same quarter last year. Basic and diluted net loss per share attributable to ordinary shareholders for the second quarter of 2024 was US$0.004, compared with basic and diluted net loss per share of US$0.01 for the same quarter last year. Excluding share-based compensation expenses of US$0.2 million, non-GAAP basic and diluted net loss per share attributable to ordinary shareholders for the second quarter of 2024 was US$0.003, compared with non-GAAP basic and diluted net loss per share attributable to ordinary shareholders of US$0.01 for the same quarter last year. Basic and diluted net loss per American depositary share ("ADS") attributable to ordinary shareholders for the second quarter of 2024 was US$0.22, compared with basic and diluted net loss per ADS of US$0.51 for the same quarter last year. Each ADS represents 60 Class A ordinary shares. Excluding share-based compensation expenses of US$0.2 million, non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders for the second quarter of 2024 was US$0.18, compared with non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders of US$0.48 for the same quarter last year. Balance Sheet As of June 30, 2024, the Company had total cash, cash equivalents and time deposits of US$21.0 million, compared with US$23.4 million as of December 31, 2023. The Company had advances from students3 of US$34.5 million as of June 30, 2024, compared with US$27.2 million as of December 31, 2023. 3 "Advances from students" is defined as the amount of obligation to transfer goods or service to students or business partners for which consideration has been received from students in advance. The deposits from students are also presented in the total amount of "advances from students" Outlook For the third quarter of 2024, the Company currently expects net gross billings to be between $17.0 million and $18.0 million, which would represent a sequential growth of 7.2% to 13.5%. The foregoing outlook is based on current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. Conference Call The Company's management will host an earnings conference call at 8:00 AM U.S. Eastern Time on August 23, 2024 (8:00 PM Singapore/Hong Kong time on August 23, 2024). Dial-in details for the earnings conference call are as follows: United States (toll free): 1-888-346-8982 International: 1-412-902-4272 Singapore (toll free): 800-120-6157 Mainland China (toll free): 4001-201203 Hong Kong (toll free): 800-905945 Hong Kong (local toll): 852-301-84992 Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for "51Talk Online Education Group." Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.51talk.com. A replay of the conference call will be accessible until August 30, 2024, by dialing the following telephone numbers: United States (toll free): 1-877-344-7529 International: 1-412-317-0088 Replay Access Code: 1167367 About 51Talk Online Education Group 51Talk Online Education Group COE is a global online education platform with core expertise in English education. The Company's mission is to make quality education accessible and affordable. The Company's online and mobile education platforms enable students to take live interactive English lessons, on demand. The Company connects its students with a large pool of highly qualified teachers that it assembled using a shared economy approach, and employs student and teacher feedback and data analytics to deliver a personalized learning experience to its students. Use of Non-GAAP Financial Measures In evaluating its business, 51Talk considers and uses the following measures defined as non-GAAP financial measures by the SEC as supplemental metrics to review and assess its operating performance: non-GAAP sales and marketing expenses, non-GAAP product development expenses, non-GAAP general and administrative expenses, non-GAAP operating expenses, non-GAAP operating income/(loss), non-GAAP net income/(loss), non-GAAP net income/(loss) attributable to ordinary shareholders, and non-GAAP net income/(loss) attributable to ordinary shareholders per share and per ADS. To present each of these non-GAAP measures, the Company excludes 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. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this press release. 51Talk believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. 51Talk believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to 51Talk's historical performance. 51Talk computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. 51Talk believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation expenses that have been and will continue to be for the foreseeable future a significant recurring expense in the 51Talk's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this press release provides more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures. Safe Harbor Statement This press release contains statements that may constitute "forward-looking" statements pursuant to 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", "aims", "future", "intends", "plans", "believes", "estimates", "likely to" and similar statements. Among other things, 51Talk's quotations from management in this announcement, as well as 51Talk's strategic and operational plans, contain forward-looking statements. 51Talk may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about 51Talk's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. 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: 51Talk's goals and strategies; 51Talk's expectations regarding demand for and market acceptance of its brand and platform; 51Talk's ability to retain and increase its student enrollment; 51Talk's ability to offer new courses; 51Talk's ability to engage, train and retain new teachers; 51Talk's future business development, results of operations and financial condition; 51Talk's ability to maintain and improve infrastructure necessary to operate its education platform; competition in the online education industry in its international markets; the expected growth of, and trends in, the markets for 51Talk's course offerings in its international markets; relevant government policies and regulations relating to 51Talk's corporate structure, business and industry; general economic and business condition in the Philippines, its international markets and elsewhere; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in 51Talk's filings with the SEC. All information provided in this press release is as of the date of this press release, and 51Talk does not undertake any obligation to update any forward-looking statement, except as required under applicable law. 51TALK ONLINE EDUCATION GROUP UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) As of Dec. 31, Jun. 30, 2023 2024 US$ US$ ASSETS Current assets Cash and cash equivalents 21,298 16,686 Time deposits 2,091 4,311 Inventory - 29 Prepaid expenses and other current assets 6,394 10,424 Total current assets 29,783 31,450 Non-current assets Property and equipment, net 138 181 Intangible assets, net 92 86 Right-of-use assets 723 1,413 Deferred tax assets 72 69 Other non-current assets 348 340 Total non-current assets 1,373 2,089 Total assets 31,156 33,539 LIABILITIES AND SHAREHOLDERS' DEFICITS Current liabilities Advances from students 27,214 34,497 Accrued expenses and other current liabilities 6,189 6,353 Amounts due to related parties 4,077 3,620 Lease liabilities 590 820 Taxes payable 1,060 741 Total current liabilities 39,130 46,031 Non-current liabilities Lease liabilities 41 519 Other non-current liabilities 176 274 Total non-current liabilities 217 793 Total liabilities 39,347 46,824 Total shareholders' deficits (8,340) (13,617) Noncontrolling interests 149 332 Total deficits (8,191) (13,285) Total liabilities and shareholders' deficits 31,156 33,539 51TALK ONLINE EDUCATION GROUP UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands except for number of shares and per share data) For the three months ended For the six months ended Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, 2023 2024 2024 2023 2024 US$ US$ US$ US$ US$ Net revenues 6,260 9,446 10,960 11,812 20,406 Cost of revenues (1,354) (2,128) (2,400) (2,596) (4,528) Gross profit 4,906 7,318 8,560 9,216 15,878 Operating expenses Sales and marketing expenses (5,109) (7,728) (7,335) (9,550) (15,063) Product development expenses (694) (945) (851) (1,356) (1,796) General and administrative expenses (2,053) (2,589) (2,789) (3,812) (5,378) Total operating expenses (7,856) (11,262) (10,975) (14,718) (22,237) Loss from operations (2,950) (3,944) (2,415) (5,502) (6,359) Interest income 36 82 63 69 145 Other (expenses)/income, net (45) 141 1,131 (120) 1,272 Loss before income tax benefit/(expenses) (2,959) (3,721) (1,221) (5,553) (4,942) Income tax benefit/(expenses) 61 (22) (41) 52 (63) Net loss (2,898) (3,743) (1,262) (5,501) (5,005) Net loss attributable to noncontrolling interests - (19) (15) - (34) Net loss attributable to the Company's ordinary shareholders (2,898) (3,724) (1,247) (5,501) (4,971) Weighted average number of ordinary shares used in computing basic and diluted loss per share 340,329,892 345,124,338 346,701,530 339,836,750 345,913,731 51TALK ONLINE EDUCATION GROUP UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands except for number of shares and per share data) For the three months ended For the six months ended Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, 2023 2024 2024 2023 2024 US$ US$ US$ US$ US$ Net loss per share attributable to ordinary shareholders Basic and diluted (0.01) (0.01) (0.00) (0.02) (0.01) Net loss per ADS attributable to ordinary shareholders Basic and diluted (0.51) (0.65) (0.22) (0.97) (0.86) Share-based compensation expenses are included in the operating expenses as follows: Sales and marketing expenses (37) (29) (31) (85) (60) Product development expenses (36) (33) (24) (90) (57) General and administrative expenses (126) (225) (180) (246) (405) 51TALK ONLINE EDUCATION GROUP Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures (In thousands except for number of shares and per share data) For the three months ended For the six months ended Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, 2023 2024 2024 2023 2024 US$ US$ US$ US$ US$ Sales and marketing expenses (5,109) (7,728) (7,335) (9,550) (15,063) Less: Share-based compensation expenses (37) (29) (31) (85) (60) Non-GAAP sales and marketing expenses (5,072) (7,699) (7,304) (9,465) (15,003) Product development expenses (694) (945) (851) (1,356) (1,796) Less: Share-based compensation expenses (36) (33) (24) (90) (57) Non-GAAP product development expenses (658) (912) (827) (1,266) (1,739) General and administrative expenses (2,053) (2,589) (2,789) (3,812) (5,378) Less: Share-based compensation expenses (126) (225) (180) (246) (405) Non-GAAP general and administrative expenses (1,927) (2,364) (2,609) (3,566) (4,973) Operating expenses (7,856) (11,262) (10,975) (14,718) (22,237) Less: Share-based compensation expenses (199) (287) (235) (421) (522) Non-GAAP operating expenses (7,657) (10,975) (10,740) (14,297) (21,715) Loss from operations (2,950) (3,944) (2,415) (5,502) (6,359) Less: Share-based compensation expenses (199) (287) (235) (421) (522) Non-GAAP loss from operations (2,751) (3,657) (2,180) (5,081) (5,837) 51TALK ONLINE EDUCATION GROUP Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures (In thousands except for number of shares and per share data) For the three months ended For the six months ended Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, 2023 2024 2024 2023 2024 US$ US$ US$ US$ US$ Income tax benefit/(expenses) 61 (22) (41) 52 (63) Less: Tax impact of Share-based compensation expenses - - - - - Non-GAAP income tax benefit/(expenses) 61 (22) (41) 52 (63) Net loss attributable to the Company's ordinary shareholders (2,898) (3,724) (1,247) (5,501) (4,971) Less: Share-based compensation expenses (199) (287) (235) (421) (522) Non-GAAP net loss attributable to the Company's ordinary shareholders (2,699) (3,437) (1,012) (5,080) (4,449) Weighted average number of ordinary shares used in computing basic and diluted loss per share 340,329,892 345,124,338 346,701,530 339,836,750 345,913,731 Non-GAAP net loss per share attributable to ordinary shareholders Basic and Diluted (0.01) (0.01) (0.00) (0.01) (0.01) Non-GAAP net loss per ADS attributable to ordinary shareholders Basic and Diluted (0.48) (0.60) (0.18) (0.90) (0.77) View original content:https://www.prnewswire.com/news-releases/51talk-online-education-group-announces-second-quarter-2024-results-302229388.html SOURCE 51Talk Online Education Group Market News and Data brought to you by Benzinga APIs