51Talk Splits Online English Tutoring Business in Chinese Mainland
China Online Education Group (51Talk), a global education platform with core expertise in English teaching, on June 24 announced that it would split its English tutoring businesses in the Chinese mainland, focusing on the development of overseas English training for young people.
51Talk said that it has entered into a definitive share purchase agreement with Dasheng Holding (HK) Limited, an entity controlled by Jack Huang, chairman of the board of directors and its CEO. Pursuant to the agreement, Huang, through Dasheng, will acquire all of the company’s online English tutoring businesses in the Chinese mainland, including all associated liabilities and assets, for a nominal sum of $1.
The closing of the deal is expected to take place on or around June 30. Upon its completion, the company expects to shift from a negative net assets position to a positive net assets position.
The company’s overseas business outside the China mainland and its associated assets and liabilities are not part of the transaction and will be the company’s strategic focus going forward.
Since its establishment on July 8, 2011, 51Talk has received investment from many well-known institutions in China and abroad, such as Zhen Fund, DCM, Shunwei Capital and Sequoia Capital, and was listed on the NYSE on June 10, 2016.
51Talk also announced its unaudited financial results for the first quarter ended March 31, 2022. During the period, its net revenues were $9.5 million, an 89.7% decrease from $92.4 million for the first quarter of 2021. The non-GAAP net loss was $20.8 million, compared with non-GAAP net income of $2.6 million for the first quarter of 2021. Cash, cash equivalents, restricted cash, time deposits and short-term investments balance reached $126.4 million as of March 31, 2022.
51Talk said in its financial report that its net revenues for the first quarter of 2022 witnessed an 89.7% year-on-year decrease, as it did not recognize $48.0 million in non-compliant lesson consumption as revenues, recording the amount as contingent liabilities instead. Meanwhile, the number of active students with general lesson consumption in the first quarter of 2022 was 298,600, a 24.0% decrease from 392,700 for the same quarter last year.
