China Online Education Group (NYSE:COE) Q1 2019 Results Conference Call June 14, 2019 8:00 AM ET
Judy Piao - IR
Jack Huang - CEO
Min Xu - CFO
Liming Zhang - COO
- Judy Piao - IR
- 杰克黄 - 首席执行官
- 徐敏 - 首席财务官
- 张黎明 - 首席运营官
Bo Pei - Oppenheimer
Zhonghai Yu - CICC
Roger Parodi - Silverhorn
- Bo Pei - 奥本海默
- 中海宇 - 中金公司
- Roger Parodi - Silverhorn
Hello, ladies and gentlemen. Thank you for standing by for China Online Education Group's First Quarter 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. [Operator Instructions]
I will now turn the call over to your host, Ms. Judy Piao, Investor Relations for the Company. Please go ahead, Judy.
你好，女士们，先生们。 感谢您对中国在线教育集团2019年第一季度收益电话会议的支持。 此时，所有参与者都处于只听模式。 在管理层准备好的评论之后，将会有一个问答环节。 今天的电话会议正在录制中。 [操作说明]
我现在将把这个电话转给你的主人，公司投资者关系部的Judy Piao女士。 请继续，朱迪。
Hello, everyone, and welcome to the first quarter earnings conference call of China Online Education Group, also known as 51Talk. The Company's results were issued via 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 the IR section of its website at ir.51talk.com.
Mr. Jack Huang, our Chief Executive Officer; and Mr. Min Xu, our CFO will begin with some prepared remarks. Following the prepared remarks, Mr. Liming Zhang, our Chief Operating Officer, will also join the call for our Q&A session.
Before we continue, please note that today's 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 51Talk's earnings press release and this conference call include discussions 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. Please go ahead.
Okay. Hello, everyone. Thank you very much for joining us for our first quarter earnings conference call.
We had a solid start in 2019, with both revenues and gross billings topping the high end of our guidance. Our first quarter results reflect the successful and consistent execution of our strategies initiatives which focus on our core K-12 one-on-one mass-market program in China's lower-tier places.
We continue to streamline our business to focus our resources on providing high-quality programs for the growing K-12 market. Our growth strategy is sharply focused on bringing our programs to China's large and underserved markets in non-tier 1 city. Our live online English offerings are a good match to growing demand in tier 2 and tier 3 cities. We are capitalizing on this opportunity. We are actively marketing our services here and it is working.
Our referral rates are growing as evidenced by our expanding gross billings. In fact, in the first quarter, our gross billing from non-tier-1 cities accounted for an impressive 72.8% of our K-12 mass-market one-on-one offerings. This compares to just 63% in the same period one year ago.
As we move through the year, a key goal will be to continue to make learning accessible throughout China by bringing out our educational offerings to underserved markets. Based on our model, we can easily leverage our existing programs in these non-tier-1 cities. We have a stable and scalable process in place with our foreign teacher operations in the Philippines to support this growth.
With our teacher recruiting, training and management systems firmly in place, as well as strong local government support, we are confident in our ability to scale our teacher sourcing capabilities as we expected.
As we expand, in 2019, we will continue to dedicate resources to increasing the accessibility of our courses, improving our exposure and strengthening the quality of our offerings and technology while achieving a balance between growing our top line and improving our bottom-line.
So, with that, I will now turn the call over to our CFO, Xu Min.
Thank you, Jack.
The diligent execution of our more focused mass market strategy contributed to improve the bottom line and healthy growth in the first quarter. We reduced our non-GAAP net loss by 55.1% to RMB59.5 million from RMB132.4 million in fourth quarter 2018.
Our one-on-one business gross billings grew by 37.4% year-over-year, and our overall gross margin reached 67.3%, up from 64.6% for the first quarter of 2018. In addition, gross billing increased by 28.1% year-over-year -- gross profit increased by 28.1% year-over-year to RMB217.2 million. Through enhanced sales training and improving sales capacity planning emphasis on referrals, and prudent cost control and cash deployment, we will spur our opportunity for growth while improving our bottom line.
Now, I would like to walk you through our first quarter 2019 financial highlights. Net revenues for the first quarter of 2019 were RMB323 million, a 23% increase from RMB262.6 million for the first quarter of 2018. The increase was primarily attributed to an increase in a number of active students. The number of active students in the first quarter of 2019 was approximately 227,000, a 19.2% increase from approximately 190,000 in the first quarter of 2018.
Net revenues from one-on-one offerings for first quarter of 2019 were RMB295.5 million, a 20.4% increase from RMB245.5 million for the first quarter of 2018. Net revenues from small class offerings for first quarter of 2019 were RMB27.5 million, compared with RMB19.1 million for the first quarter of 2018.
Cost of revenues for first quarter of 2019 was RMB105.7 million, a 13.8% increase from RMB92.9 million for the first quarter of 2018. The increase was primarily driven by an increase in total service fees paid to teachers, mainly due to an increased number of paid lessons.
Cost of revenues of one-on-one offerings for the first quarter of 2019 was RMB90.8 million, a 12% increase from RMB81.1 million for first quarter of 2018. Cost of revenues of small class offerings for the first quarter of 2019 was RMB14.9 million, a 26.1% increase from RMB11.8 million for the first quarter of 2018. Gross profit for the first quarter of 2019 was RMB217.2 million, a 28.1% increase from RMB169.6 million for the first quarter of 2018. Gross Margin for the first quarter of 2019 was 67.3% compared with 64.6% for the first quarter of 2018.
One-on-one offerings gross margin for first quarter of 2019 was 69.3%, compared with 67% for first quarter of 2018. The increase was mainly attributable to the inclusion of the Company's audio picture book in course packages, which carries a higher margin. Our small class offering gross margin for the first quarter of 2019 was 45.7%, compared with 30.7% for the first quarter of 2018.
Total operating expenses for the first quarter of 2019 were RMB278.1 million, a 0.7% decrease from RMB280.2 million for the first quarter of 2018.
Sales and marketing expenses for the first quarter of 2019 were RMB186.3 million, an 8.6% increase from RMB171.6 million for the first quarter of 2018. The increase was mainly due to higher sales personnel costs related to an increase in the number of sales and marketing personnel. Excluding share-based compensation expenses, non-GAAP sales and marketing expenses for the first quarter of 2019 were RMB186 million, a 9.2% increase from RMB170.4 million for the first quarter of 2019.
我们的一对一业务总收入同比增长37.4％，我们的整体毛利率达到67.3％，高于2018年第一季度的64.6％。此外，总收入增长28.1％ - 过去一年 - 毛利润同比增长28.1％至人民币217.2百万元。通过加强销售培训和改善销售能力计划，重点推荐，谨慎的成本控制和现金部署，我们将在提高利润的同时刺激增长机会。
现在，我想向您介绍2019年第一季度的财务摘要。 2019年第一季度的净收入为人民币3.23亿元，比2018年第一季度的人民币262.6百万元增长23％。这一增长主要归因于一些活跃学生的增加。 2019年第一季度的在职学生人数约为227,000人，比2018年第一季度的约190,000人增加了19.2％。
2019年第一季度一对一产品的收入成本为人民币90.8百万元，比2018年第一季度的人民币81.1百万元增长12％。2019年第一季度小额产品的收入成本为人民币14.9百万元，较2018年第一季度的人民币118万元增长26.1％。2019年第一季度的毛利润为人民币217.2百万元，较第一季度的人民币169.6百万元增长28.1％。 2018. 2019年第一季度的毛利率为67.3％，而2018年第一季度为64.6％。
Product development expenses for the first quarter of 2019 were RMB40.7 million, a 22.1% decrease from RMB52.2 million for the first quarter of 2019. The decrease was primarily due to a decrease in the number of personnel. Excluding share-based compensation, non-GAAP product development expenses for the first quarter of 2019 were RMB40.1 million, a 20.8% decrease from RMB50.7 million for the first quarter of 2019.
G&A expenses for the first quarter of 2019 were RMB51.2 million, a 9.2% decrease from RMB58.4 million for the same quarter last year. Excluding share-based camp, non-GAAP G&A expenses for the first quarter of 2019 were RMB48.1 million, a 8.4% decrease from RMB52.6 million for the same quarter last year.
Loss from operations for the first quarter of 2019 was RMB60.9 million compared with RMB110.5 million for the first quarter of 2018.
Non-GAAP loss from operations for the first quarter of 2019 was RMB57.0 million compared with RMB104 million for the first quarter of 2018.
Net loss for the first quarter of 2019 was RMB63.6 million compared with RMB112.7 million for the first quarter of 2018.
Non-GAAP net loss for the first quarter of 2019 was RMB59.5 million compared with RMB106.1 million for the first quarter of 2018.
Basic and dilute net loss per ADS attributable to ordinary shareholders for the first quarter of 2019 was RMB3.15 compared with RMB5.55 for first quarter of 2018. Each ADS represents 15 Class A ordinary shares.
Non-GAAP basic and diluted net loss per ADS for the first quarter of 2019 was RMB2.85 compared with RMB5.25 for the fourth quarter of 2018.
As of March 31, 2019, we had total cash, cash equivalents, time deposits and short-term investments of RMB697.1 million compared with RMB712.1 million as of December 31, 2018.
As of March 31, 2019, we have deferred revenues of RMB1.8 billion compared with RMB1.7 billion as of December 31, 2018.
So, for the second quarter of 2019, the Company currently expects net revenues to be between RMB342 million to RMB347 million, which would represent an increase of approximately 21.4% to 23.2% from RMB281.7 million for the same quarter last year; total gross billings to be between RMB465 million RMB470 million, which would represent an increase of approximately 10.7% to 11.9% from RMB420 million for the same quarter last year.
Gross billings for the Company's one-on-one business are expected to be between RMB433 million to RMB438 million, which would represent an increase of roughly 15% to 16.3% from RMB376.5 million for the quarter last year.
Gross billings for our small class business are expected to be approximately RMB32 million, which would represent a decrease of approximately 26.4% from RMB43.5 million for the same quarter last year.
The above outlook is based on the 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.
This concludes our prepared remarks. We will now open the call to questions. Operator, please go ahead.
We will now begin the question-and-answer session. [Operator Instructions] First question comes from the Bo Pei of Oppenheimer. Please go ahead.
我们现在开始问答环节。 [操作员说明]第一个问题来自奥本海默的博培。 请继续。
Hi, management, good evening. Thanks for taking my questions. I had two questions here. One is we gained pretty good operational leverage in 1Q. And then, could you kind of explain, what was the reason behind that operating leverage gain? And then, should we expect the operating expenses as a percentage of total revenue continue to go down throughout 2019? And then, my question number two is, for your 2Q guidance that actually implies a sequential deceleration of the gross billing, could the management put more color on that? Thank you very much.
嗨，管理，晚上好。 谢谢你回答我的问题。 我在这里有两个问题。 一个是我们在第一季度获得了相当好的运营杠杆。 然后，你能解释一下，运营杠杆收益背后的原因是什么？ 那么，我们是否应该预计2019年营业费用占总收入的比例会继续下降？ 然后，我的第二个问题是，对于你的第二季度指导，实际上意味着总账单的顺序减速，管理层可以为此提供更多的颜色吗？ 非常感谢你。
Thank you for the question. So, number one, we did see a good leverage -- good operating leverage, because we are working very hard. As we indicated in last few earnings calls, we're working very hard to improve our sales efficiencies. And, in fact, we did achieve that through a lot of operation -- optimization. And so, we believe the key is that we really start to see efficiency improvement in our sales and marketing. And our Q1, non-GAAP sales and marketing expense was 39% of our gross billing for our one-on-one business, much better than 48% in Q1 2018. And we believe we are going to see the benefit of our previous optimization and efficiency improvement measures, and we will continue to improve that.
And for the second question, you mentioned that our Q2 guidance indicated a de-acceleration of our gross billing. So, I would say in the sense, yes, from the number we do see, it is slowing down compared to Q1. However, remember, Q1, we are comparing to a relatively weak 2018 Q1 quarter. And so, it is hard to kind of continue that kind of growth. So, we do see our -- because we're seeing continued growth improvements throughout 2019, so, starting Q2 we are comparing to a much better performance in terms of our gross billing. So, we do expect our healthy growth to continue and drive of our non-tier-1 city expansion. And we do expect that as we continue to deepen our penetration in non-tier-1 city, we will see continued growth well improving our bottom-line.
感谢你的提问。所以，第一，我们确实看到了良好的杠杆 - 良好的经营杠杆，因为我们正在努力工作。正如我们在最近的几次财报电话会议中指出的那样，我们正在努力提高我们的销售效率。事实上，我们通过大量的操作 - 优化来实现这一目标。因此，我们认为关键是我们真正开始看到销售和营销的效率提升。我们的Q1，非GAAP销售和营销费用占我们一对一业务总收入的39％，远高于2018年第一季度的48％。我们相信我们将看到我们之前优化的好处和效率改进措施，我们将继续改进。
对于第二个问题，您提到我们的第二季度指南显示我们的总收费减少了。因此，从某种意义上讲，我会说，从我们看到的数字来看，与Q1相比，它正在放缓。但是，请记住，Q1，我们正在比较2018年第一季度相对疲弱的季度。因此，很难继续这种增长。所以，我们确实看到了我们 - 因为我们看到整个2019年都在持续增长，因此，从第二季度开始，我们的总体结算方面的表现要好得多。因此，我们确实希望我们的健康增长继续并推动我们的非一线城市扩张。我们确实预计，随着我们继续深化我们在非一线城市的渗透率，我们将看到持续增长，并改善我们的底线。
The next question comes from Zhonghai Yu of CICC. Please go ahead.
So, my first question is the same question that how do you see the trend of your user acquisition cost, is it going up or down, like, can you give like brief range like they rose by about 5% over the same time Y-o-Y like this? My second question is about the competitive landscape. While given that we have very unique positioning that we've had in the tier-3 to tier4 cities, who do we see as our main competitors, and how is it going between we and other players?
所以，我的第一个问题是同样的问题，你如何看待你的用户获取成本的趋势，是上升还是下降，比如，你能给出像他们在同一时间上涨约5％的短暂范围同样喜欢 这个？ 我的第二个问题是关于竞争格局。 虽然我们在三线到四线城市拥有非常独特的定位，但我们认为谁是我们的主要竞争对手，我们和其他玩家之间的关系如何呢？
So, I'll answer the first question and Jack will answer the second question. So, in terms of customer acquisition costs, we're seeing it's quite stable compared to the past few quarters. We did see a slight improvement in terms of our marketing efficiency. And we are seeing kind of a stable conversion cost. So, it is relatively stable throughout the year. And I'll hand over to Jack for the second question.
所以，我会回答第一个问题，杰克将回答第二个问题。 因此，就客户获取成本而言，我们发现与过去几个季度相比，它相当稳定。 我们确实看到营销效率略有改善。 我们看到了稳定的转换成本。 因此，全年相对稳定。 我将把第二个问题移交给杰克。
Okay. So, I’ll translate. So starting 2019, we are seeing trends that the VC market is cooling down. And so, a lot of our competitors are less crazy burning cash to trying to grow their business. So, we have to say, the intensity of competition is much lower, and it's a much healthier environment for us. As you know, many of our competitors, they use North American teachers. So, their price is 3 times of our price. So, we -- our offerings are much more attractive in lower tier cities. So, we can achieve much better penetration there. As you see from the number that 73% of our core business gross billing are from non-tier-1 cities.
好的。 所以，我会翻译。 因此，从2019年开始，我们看到风险投资市场正在降温的趋势。 因此，我们的许多竞争对手都不那么疯狂地挣钱来试图发展他们的业务。 因此，我们不得不说，竞争的激烈程度要低得多，对我们来说这是一个更健康的环境。 如您所知，我们的许多竞争对手都使用北美教师。 所以，他们的价格是我们价格的3倍。 所以，我们 - 我们的产品在低线城市更具吸引力。 因此，我们可以在那里实现更好的渗透。 正如您从数字中看到的那样，73％的核心业务总收入来自非一线城市。
I have follow-up questions. So, given that we have very strong capability in terms of teacher recruiting and training and management, when would you see will be the best timing for us to move from Philippines teachers to like European and Western, American student teachers? I know we did have stop our American Academy business, but when will be the best time for we to get back to the game?
我有后续问题。 因此，鉴于我们在教师招聘，培训和管理方面具有很强的能力，您何时会看到我们从菲律宾教师转向喜欢欧洲和西方的美国学生教师的最佳时机？ 我知道我们确实停止了我们美国学院的业务，但什么时候才能回到游戏中？
So, as we mentioned earlier, one of our core competencies is our teacher management. So, in the Philippines, we have a 1,000 plus full time team working with close to 20,000 Filipino teachers. We also have eight local offices in the Philippines. We're very proud of the teaching quality of our Filipino teachers. And we firmly believe that a key for English study is frequency, how frequently you take your lessons, not where your teachers are from. And we are also very lucky that we're getting support from government of both China and the Philippines, and under the one belt policy. And we believe there is a lot of opportunities for us to continue to build up our core competencies and Filipino teacher operation.
因此，正如我们之前提到的，我们的核心竞争力之一是我们的教师管理。 因此，在菲律宾，我们有一支1000多名全职团队，与近20,000名菲律宾教师合作。 我们在菲律宾还有八个当地办事处。 我们为菲律宾教师的教学质量感到自豪。 我们坚信，英语学习的关键在于频率，您上课的频率，而不是您的老师来自哪里。 我们也非常幸运，我们得到了中国和菲律宾政府的支持，并且在一条腰带政策下也是如此。 我们相信，我们有很多机会继续建立我们的核心竞争力和菲律宾教师的运作。
We believe our focus on the lower tier city has been quite successful and we will stick to that.
[Operator Instructions] The next question comes from Roger Parodi of Silverhorn. Please go ahead.
[操作员说明]下一个问题来自Silverhorn的Roger Parodi。 请继续。
Hi, Jack. Hi, Xu Min. Thank you for taking my question. You have -- actually you have already discussed pretty what I wanted -- the main questions I wanted to ask. But you might still give some color. You were able to decrease the loss very substantially. What was the main reasons to do that? The other thing is, now 73% comes from consumer second and the low tier, not first tier cities, how could you achieve that? Because I think it takes quite a different marketing approach and this thus leads to -- that you could decrease the loss. And then, you have a very impressive margin as well, the gross margin. What is the reason for that?
嗨，杰克。 嗨，徐敏。 谢谢你提出我的问题。 你有 - 实际上你已经讨论了我想要的东西 - 我想问的主要问题。 但你可能还会给它一些颜色。 你能够大大减少损失。 这样做的主要原因是什么？ 另一方面，现在73％来自消费者第二和低等级，而不是一线城市，你怎么能实现这一目标？ 因为我认为这需要采用完全不同的营销方法，因此可以减少损失。 然后，您的毛利率也非常可观。 这是什么原因？
I’ll translate first. So, let me share why the net loss narrowed down this quarter. So, the first important reason I want to talk about is to gross billing P&L breakeven. So, starting 2Q ‘18, our one-on-one business has achieved gross billing P&L breakeven for 4 consecutive quarters. We explained in earlier earnings call what is gross billing P&L contribution. So, basically what we do is we take the gross billings times the gross margin and then subtract sales and marketing, G&A and R&D to get our gross billing P&L contribution. So, because the revenues are deferred and until the lessons are taken, so we should see positive impact from previous positive gross billing P&L contribution starting this year.
我先翻译一下。 那么，让我分析为什么本季度净亏损收窄。 因此，我想要讨论的第一个重要原因是对P＆L盈亏平衡计算。 因此，从18年第二季度开始，我们的一对一业务连续4个季度实现了盈亏平衡计划。 我们在之前的财报中解释了什么是总计费损益贡献。 因此，基本上我们所做的是将总收入乘以毛利率，然后减去销售和营销，G＆A和R＆D以获得我们的总计费损益。 因此，由于收入被推迟并且直到吸取教训，因此我们应该看到从今年开始的以前积极的总计费用损失贡献的积极影响。
All right. So, next, I’m going to talk about gross margin, which you also asked about. So, here are several fronts we're getting some improvements. So, number one, we did a price increase earlier in 2019. We increased price by 10% to 15%. So, this contributes to our one-on-one in this margin increase. Second, because our American Academy business has relatively lower margin, we actually are seeing a lower mix of our American Academy in Q1. So, that also contributed to some of the gross margin improvement. And third, our small class business also improves as margin from last quarter’s 27.9% to this quarter's 45.7%. So, all these contributed to our margin expansion.
行。 那么，接下来，我将谈谈毛利率，你也问过这个问题。 所以，这里有几个方面我们正在进行一些改进。 因此，排名第一，我们在2019年早些时候提价。我们将价格提高了10％至15％。 因此，这有助于我们在这一利润增长中实现一对一。 其次，由于我们的美国学院业务的利润率相对较低，我们实际上在第一季度看到了美国学院的较低组合。 因此，这也促成了部分毛利率的改善。 第三，我们的小型企业也从上一季度的27.9％增加到本季度的45.7％。 所以，所有这些都促进了我们的利润率扩张。
Last but not least is the sales efficiency. As we mentioned earlier, we actually improved our non-GAAP sales and marketing expense as a percentage of our gross billings from Q1 last year, 48% to 39% in this quarter. So, all these sectors contributed to our margin expansion. And we will continue to work very hard on all these fronts to target to continue to decrease our net loss.
最后但并非最不重要的是销售效率。 正如我们之前提到的，我们实际上将非GAAP销售和营销费用从去年第一季度的总支出中的百分比提高到了本季度的48％至39％。 因此，所有这些部门都有助于我们的利润率扩张。 我们将继续在所有这些方面努力工作，以继续减少净亏损。
Okay, understood. Thank you for that explanation. Do you still hear me, Xu Min?
好的，明白了。 谢谢你的解释。 你还听我说，徐敏？
Yes. Okay. Maybe then allow me to ask a quick follow-on question.
是。 好的。 也许然后让我问一个快速的后续问题。
That’s related to the guidance for Q2. Looking at all these impressive operational improvements, what is the normal growth rate that we could -- that you would see that still allows you to -- it’s a very theoretical question, I leave it up to you, how to answer it. But at what growth rate do you think you can maintain such an operational improvement, such efficiency improvement, and then can continue to grow? I just look at this number right now for Q2, it's probably bit on the softer side. Just give me a bit more confidence that the growth engine is still working.
这与第二季度的指导有关。 看看所有这些令人印象深刻的运营改进，我们可以达到的正常增长率是什么 - 你会看到它仍然允许你 - 这是一个非常理论化的问题，我把它留给你，如何回答它。 但是你认为你能以什么样的增长率保持这样的运营改进，这样的效率提升，然后才能继续增长？ 我现在只看第二季的这个数字，它可能位于较软的一面。 让我更有信心增长引擎仍然有效。
Yes. So, in terms of the expectation of the growth, I would say, in the near term, we believe the growth will be -- especially the one-on-one growth, we should be expecting similar growth rate to probably last Q2, Q3. Because as we mentioned earlier, we're not putting a lot of emphasis on the gross billing growth. So, as long as we're probably achieving similar one-on-ones business growth as last year, our emphasis still on continue to decrease our net loss.
是。 因此，就增长的预期而言，我认为，在短期内，我们认为增长将会 - 特别是一对一的增长，我们应该预期类似的增长率可能持续到第二季度，第三季度。 因为正如我们之前提到的，我们并没有过多地强调总账单增长。 因此，只要我们可能实现与去年类似的一对一业务增长，我们的重点仍然是继续减少净亏损。
All right. So, let me translate. So, when we look at our Q2 guidance, it looks less impressive just because we did really great in Q1, and the growth in Q1 looks even better when you remember that we had a really weak Q1 in 2019. So, but we do expect our one-on-one business continues to grow and especially, when you look at year-over-year growth still much stronger than a year ago.
And also for the small class business, we are also seeing a decline. And after one year's operation, we do see small class as a great product. And, but it is still looking for its targeted customer segment. So, what we see is that the customer acquisition cost for small class business is still higher than our one-on-one business, very similar to other small class peers. So, it is our target to continue work on the business model to lower our customer acquisition cost and improve unit economic model. And as you see that, as we continue to balance our business model, trying to achieve getting closer to profitability, we will continue to target to grow our business in a healthy way.
Okay, thanks a lot. Makes a lot of sense. Thank you for that, Jack, Xu Min.
好的，非常感谢。 很有道理。 谢谢你，杰克，徐敏。
Thank you, Roger.
As there are no further questions now, I'd like to turn the call back over to the Company for closing remarks.
Thank you once again for joining us today. If you have further questions, please feel free to contact 51Talk's Investor Relations through the contact information provided on our website of the Piacente Group Investor Relations.
This concludes this conference call. You may now disconnect your line. Thank you.
再次感谢您今天加入我们。 如果您还有其他问题，请随时通过我们的Piacente Group投资者关系网站上提供的联系信息联系51Talk的投资者关系部。
本次电话会议结束。 您现在可以断开线路了。 谢谢。
Once again, the conference has ended. You may disconnect your line. Thank you.
会议再次结束。 你可以断开你的线路。 谢谢。
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