Koolearn Technology Holding Limited, an online education company under New Oriental, announced on Monday that the group will stop off-campus training services for compulsory education in mainland China, completing the termination by the end of November 2021. Earlier, DFUB, a wholly-owned subsidiary of Koolearn, had announced the closure of its K12 business.
According to the announcement, the board of directors expects that the termination of the off-campus training business for compulsory education will have a significant adverse impact on the total revenue of the group for the financial year ended May 31, 2022 and subsequent periods. The board estimates that the firm’s K9 business will account for about 58%-73% of the K12 education segment in terms of total revenue contribution in the two financial years ended May 31, 2021.
According to financial data listed in the announcement, the total revenue of the K12 branch of Koolearn in FY 2021 is 787 million yuan ($123.3 million), costs are 812 million yuan, and gross losses total 25.04 million yuan. New Oriental Online said that its board of directors will continue to consider appropriate strategic opportunities and strive to maximize the value of the existing K9 business after the termination.
Koolearn is a professional online education website under New Oriental, which provides courses covering six categories: examination to study abroad, domestic examination, vocational education, English learning, multi-language learning and K12 education. In March 2019, Koolearn was listed in Hong Kong.
In September, the results of the 2021 fiscal year announced by New Oriental showed that the annual net income under US GAAP was $4.28 billion with a year-on-year increase of 19.5%, while the operating income was $117 million with a sharp drop of 70.6% year-on-year. The net profit was $230 million, with a year-on-year decrease of 35.2%.
At the New Oriental Annual General Meeting held on September 17, Yu Minhong, Founder of New Oriental, announced that the offline enrollment of primary and junior high school courses will be stopped after the autumn term, and teaching sites will be gradually closed in various cities.
The meeting also disclosed the latest layoff plan. Yu said that the original plan was to lay off 40,000 people by the end of August, but as of mid-September, less than 10,000 people had been laid off. On September 25, New Oriental said at a Beijing press conference that the firm would further develop its business in college student education.