On March 22nd, 51Talk (AMEX: COE) released its unaudited full year and fourth quarter financial reports for 2023.
In the fiscal year 2023, 51Talk's total revenue was 27.3 million US dollars, a significant increase of 81.4% year-on-year; A net loss of 14 million US dollars narrowed the loss by 67% year-on-year; The number of active students attending classes is about 50800, a significant increase of 93.9% year-on-year.
The company's gross profit was 21 million US dollars, a year-on-year increase of 77%; The gross profit margin is 76.8%, slightly lower than 78.8% in 2022.
The basic and diluted net loss per share attributable to ordinary shareholders in 2023 was $0.04, while the basic and diluted net loss per share in 2022 was $0.13.
In the fourth quarter of 2023, the company's revenue was 7.7 million US dollars, a year-on-year increase of 51.6%; A net loss of 4.7 million US dollars, compared to a net loss of 2 million US dollars in the same period last year, narrowing the year-on-year loss by 135%; The number of active students in class was about 40500, an increase of 77.6% year-on-year.
In 2011, Huang Jiajia from the Department of Foreign Languages at Tsinghua University founded 51Talk, which specializes in online English business. In November of the same year, 51Talk website was officially launched and received investments from several well-known domestic and foreign institutions, including Xu Xiaoping's True Fund Angel Investment, DCM, Shunwei Capital, Sequoia Capital, etc. It was officially listed on the New York Stock Exchange in 2016.
After the release of the "double reduction" policy, 51Talk has chosen to go global and has been betting on the international market for two consecutive years. Currently, the company's main "battlefield" is in the Southeast Asian market.
According to the official website, the company currently has users in 72 countries and regions around the world, serving over 40 million users, and has over 20000 foreign teachers from countries such as the United States, Canada, and the Philippines. Among them, Japan, the United States, Canada, and Italy are the four countries with the highest number of students.
On March 24, 2022, 51Talk's board of directors received a non binding proposal from Huang Jiajia, the founder, chairman and CEO of the company, to acquire all businesses in Chinese Mainland for one dollar. The proposed acquisition of all businesses of the Company in Chinese Mainland, as well as subsidiaries and VIEs controlled by the Company; The proposed acquisition price for the target company is $1, as it believes that the total enterprise value of the target company is equivalent to its existing total liabilities and obligations.
51Talk said that the acquisition proposal does not include the company's overseas business outside Chinese Mainland and its related liabilities and assets, which is also the strategic focus of the company.
The performance and revenue for fiscal years 2022 and 2023 do not include its domestic youth English business, but all come from its overseas business.
"The 2023 fiscal year is a milestone year for us," Huang Jiajia said in her financial report. "Although the 2023 fiscal year is the second year of global expansion, last year laid a solid foundation for global business. In terms of finance, all revenue in the 2023 fiscal year comes from the international market."
"In the fiscal year 2023, we have over 50000 active students, with course expenses and total accounts totaling $40 million. Looking ahead to 2024, we will continue to strengthen localization efforts in selected markets where we see tremendous growth potential and benefit from the advantages of early adopters," said Huang Jiajia.
With the growth of performance, 51Talk has stopped reducing costs and increasing efficiency, resulting in a significant increase in operating expenses.
In 2023, 51Talk's revenue cost was 6.3 million US dollars, a year-on-year increase of 97.9%. After the increase in the number of paid courses, the total amount of service fees paid to teachers increased; The total operating expenses were $34.9 million, a year-on-year increase of 44.2%, due to an increase in sales and marketing expenses.
Specifically, the sales and marketing expenses for 2023 were $24.1 million, a year-on-year increase of 81.5%, due to an increase in the number of sales and marketing personnel and marketing investments, resulting in increased costs.
The product development cost was 3.1 million US dollars, an increase of 7.8% year-on-year, due to an increase in personal costs and benefits. General and administrative expenses were $7.7 million, a year-on-year decrease of 4.2%, due to a decrease in consulting and audit expenses.
In addition, the company's total operating expenses for the fourth quarter were $10.4 million, a year-on-year increase of 68.4%, mainly due to an increase in sales and marketing expenses.
Specifically, sales and marketing expenses for the fourth quarter were $7.7 million, a year-on-year increase of 91.9%, due to an increase in the cost of sales and marketing personnel.
The product development cost was $900000, a year-on-year increase of 98.6%, due to an increase in product development personnel and high labor costs. General and administrative expenses were $1.9 million, an increase of 7.2% year-on-year.
All in overseas, there is still an order of magnitude gap in the revenue scale of 51Talk compared to its previous development in China.
Specifically, from 2019 to 2023, the company's revenue scale was $1.478 billion, $2.054 billion, $2.181 billion, $15 million, and $27 million, respectively. However, based solely on its two-year overseas performance, the company's revenue is still on the rise.
Before the double reduction policy, the company's highest stock price was $37.19; After the double reduction, the company's stock price fell all the way to $0.76, and the decline in stock price began to gradually recover at the end of 2022.
As of December 31, 2023, the total amount of cash, cash equivalents, and fixed deposits of the company was 23.4 million US dollars; The company has advanced $27.4 million from students, up from $15.2 million in the same period last year.
51Talk also mentioned that in the first quarter of 2024, the company currently expects its total net bill to be between 11.5 million and 12 million US dollars, with a continuous increase of 3.6% -8.1% compared to the same period last year, an increase of approximately 43.8% to 50.0%.
On March 22nd Eastern Time, the company closed at $7 with a total market value of $39.6335 million. Compared to its highest market value of 611 million US dollars, it has dropped by 94%; Compared to its lowest market value of 18.4137 million US dollars, an increase of 115%.