Editor ray
On February 23rd, Elite Education released the financial report of Q 1 fiscal year (September 2020-165438+1October).
In the first fiscal quarter, the total revenue of elite education was RMB 685 million, down 14 10% year-on-year and 32.25% quarter-on-quarter. Among them, the business income of K 12 is 487 million yuan, accounting for 7 1. 1% of the total income. Pre-school education business income 1.4 1 billion yuan, accounting for 20.5%. Online education income was 30 million yuan, accounting for 4.4%.
During the reporting period, the average monthly enrollment of elite education was 148 134, a decrease of 23 163 from the previous month. The average number of people in K 12 business, preschool education and online education were 76 176, 49 12 1 0/0596, respectively, which were all lower than the previous fiscal quarter.
Although September and February are the off-season of the education industry, compared with the same period last year, the net profit of elite education decreased by 52.9 1% to-65438+64 million, and the net interest rate was -23.94%, compared with-13.76% in the same period last year. The gross profit margin also decreased from 35.2% in 2020FQ 1 to 30.43%. The recovery period after the epidemic was hit hard is an important factor.
At present, elite education still maintains a strong sales ability, which is reflected in the year-on-year growth rate of cash sales. In 2020, the sales growth rate of 12, 202 1 1 and mid-February reached 14%, 23% and 37% respectively. By the end of Q 1 fiscal year, the balance of pre-sale tuition has reached 2.75 billion yuan.
However, sales ability is not necessarily proportional to product quality and market demand. During the epidemic, negative news such as the difficulty in refunding tuition fees for elite education and the weak teachers were frequently complained by consumers. There has always been an elite known as "Hermes" in education. In order to promote profit growth and constantly raise product prices, it has undoubtedly lowered its market ceiling.
In the face of fierce competition in the teaching and training market, what new strategic start will elite education, which continues to lose money, have in the new fiscal year? What are the advantages and disadvantages of elite education in the past three months? We can see a thing or two from the financial report of FQ 1.
Prepaid tuition reached a new high.
Elite is more risky.
There are two main reasons for the decline in the operating income of elite education. First, the education industry is a prepayment model, which can only be converted into income when the class hours are consumed. Except for March-May before the entrance examination and July-August in summer, the rest of the time is the off-season of the industry. Second, due to repeated epidemics, since September, some offline businesses of elite education have been affected, resulting in a decline in profits.
These are the two major risks of elite education.
The elite's core business is K 12 one-to-one, accounting for more than 70% of its total income. The common sales model of elite education is large single sales, which gives high promotion. Parents are forced to have non-existent needs, resulting in a high refund rate in the later period.
In the first fiscal quarter, the balance of prepaid tuition fees for elite education reached 2.75 billion yuan, a record high, compared with 2.54 billion yuan in the previous fiscal quarter. The main reason is the increase in the price of single products. About 30% of cash sales come from elite VIP program, an increase of 3% over FY 2020. Executives also expect that this proportion will increase to 20% in fiscal year 20021.
In addition, the cash sales of elite K- 12 business increased 10.2% year-on-year. From September last year to June this year, 5438+ 10, the per capita new signing price of elite core VIP segment reached 44,000 yuan, up 73% year-on-year; In the preschool education business, Elite has launched the regular product 1.5 times the price of Zhihui Tang Xue PMP product and 1.7 times the price of Little Earth children's MBA English. FQ 1, the per capita new purchase price of Zhihui Tang Xue and Small Earth increased by 14% and 29% respectively.
At first glance, the sales of elite products are considerable. With the school returning to normal level, the demand of students and parents for educational products is gradually increasing.
But the problem is that prepaid tuition fees may not be fully converted into revenue. Once influenced by external factors such as environment and market, parents will have demand for refund, which will affect their cash flow. If the advance payment has been used by the enterprise for other costs, it may cause more serious risks. For example, the thunder of Weibo English, Yousheng Education, Xuebajun and other teaching and training institutions are all related to the prepayment being consumed in advance.
Last year, consumers complained many times that elite education fees were difficult to refund, and refused to refund them for various reasons, forcing them to study. Elite also said in its 2020 annual report that the company has limited experience in teaching materials or related services compared with the new courses, and it is uncertain whether the newly developed courses can be well received by the market. Once the market demand cannot be met, the ability to attract and retain students will be weakened.
In addition, the high-end track of elite education touches the ceiling and the range of users and potential users is limited. Its business model can run in the short term, but it is still full of uncertainty in the long run.
In order to meet the unexpected demand, teaching and training institutions have also made efforts on other tracks. In the past five years, elite education has invested 600 million yuan in online education. During the epidemic, Elite integrated several online course brands "Elite Online", which passively accelerated the development of this business. However, elite online has not shown a growing trend. In 20021FQ1year, the revenue of online education accounted for 4.4% of the total revenue, compared with 6% and 5% in the third and fourth quarters of the previous fiscal year respectively.
At the beginning of 2020, Elite transferred100000 students online, and the revenue of its online business mostly came from the tuition fees of the original users, which did not show a trend of attracting new users. Jing Rui Online is more like a supplement to offline products, providing users with convenient value-added services. The online and offline services at the same price make its advantages less obvious.
Of course, elite education has also shown a certain improvement trend. For example, the decline of revenue and net profit has been decreasing for three consecutive quarters, which means that elite education is narrowing the distance with the revenue figures before the epidemic. Of course, this is also related to the gradual recovery of the epidemic. This stage is also an important opportunity for teaching and training institutions, including elite education, to formulate new strategies and increase the number of customers.
Invest in building high-end VIP products
When the elite "burns money"
The year-on-year decline in revenue is also inseparable from elite investment to a certain extent. In the last fiscal quarter, elite education spent a total of 507 million operating expenses, including 290 million marketing expenses and 265,438+0.6 million general and administrative expenses, achieving 45% cash sales growth and 80% quarterly growth.
In the first quarter of 20021fiscal year, elite operating costs and operating expenses were eased. Operating costs decreased by 7.8% year-on-year to RMB 476.5 million; Operating expenses were 372 million (sales expenses 1.7 1 10,000, management expenses 20 1 10,000), down 23 million year-on-year and 1.35 million month-on-month.
But this is not entirely because the elite deliberately control the cost of expenditure. The decline in operating costs was repeatedly affected by the winter epidemic, some learning centers were closed, and personnel costs were reduced. The reduction in operating expenses is also due to the fact that a large number of offline promotion cannot continue due to the epidemic.
Of course, in the face of the unpredictable market environment, elite is also more cautious in upgrading and expanding. For example, the capital expenditure in this fiscal quarter is only 40.8 million yuan, which is 45.2% lower than 90.2 million yuan in 2020. But this has not made up for the elite's consistent "burning money" model.
In the new fiscal year, in order to support the implementation of elite VIP program, elites increased their investment in talent echelon construction and upgraded their teaching services. Teachers' costs and rental costs are also increasing.
Elite VIP program has set a high threshold for teachers, the interview admission rate is only 3%, and the salary cost of teachers has also increased by 50%. In fact, such an investment also has a risk probability. 1 Yes 1 The scale of the education model is uneconomical. On the one hand, enterprises need a large number of teachers to maintain the student-to-student ratio, which is difficult to screen and cultivate. On the other hand, teachers have low productivity, limited development space and high turnover rate. This leads to the elite need to spend a lot of money to stabilize the teaching team.
Recently, there have been many voices on the Internet, saying that elite teachers are unprofessional and have no teacher qualification certificates. Even if it has not constituted a major public opinion storm and public relations crisis, this risk item is still a time bomb in view of the long-term strategy of elite development of high-end education.
In addition, Elite is expanding its learning center. According to the financial report, Elite plans to open 27 high-end flagship VIP centers for Elite VIP in this fiscal year. The opening time of the first batch of flagship centers is June 5438+February 2020. The upgraded study room is equipped with an intelligent teaching system and more VIP rooms are set up. Therefore, the rental cost of elite products will increase from 5% to 1 1%.
The price of elite VIP products has also increased from 1.4 times in the last fiscal year to 1.8 times this year. Zuo Hong, Chief Financial Officer and Chief Strategy Officer of Elite Education, said in a conference call that encouraged by the growth of high-end strategic income, the company will continue to increase investment in core products, teacher qualifications, learning centers and quality brands.
This means that the elite mode of burning money will continue. If the elite can't attract students and parents with high-quality and stable teachers and reasonable prices, it will be difficult for the future revenue to reach the ideal state.
Competitive products with falling stock price and lagging market value
Is it feasible for the elite to sell10 billion in three years?
Elite Education announced its plan for the next 3-5 years at the financial report meeting. Its plan mainly focuses on Go Premium strategy, including three dimensions.
First, innovative products with higher prices are introduced, such as elite VIP and SVIP, and the quality of teaching and other services is improved.
On June 5438+ 10 last year, elite education officially released SVIP products. It is reported that this product is a personalized one-to-one upgraded version of elite Harvard class products and elite ace products. The senior management expects that 20% of cash sales this year will be obtained through elite VIP products, and elite VIP products will account for 60% of VIP business sales in 2023.
However, although the 1 model has market demand, it is difficult to gain a foothold in the capital market. The model of 1 right 1 is small in scale, with high track concentration, and the capital only favors the leaders. Although at present, elite education is the largest high-end educational institution in China, there are still a large number of competing products such as New Oriental, Master and Good Future in the mode of 1 to 1.
Second, pay more attention to important cities and maximize market share by constantly upgrading the center. Elite plans to launch 27 new high-end campuses in fiscal year 20021and open 150-200 flagship centers before 2023, which will account for 35%-40% of the 480 center bases.
However, in FY 2020, 53.6% of Elite's total revenue came from its business in Shanghai. If you continue to open a center in Shanghai, you will face the risk of concentration of stores. If you make efforts in other cities, you may face the risk of regional differentiation and the dominant position of competitors. This also requires elites to make corresponding adjustments according to the teaching situation in different regions and play a differentiated product strategy. If the new learning center cannot expand as expected, the financial performance will be greatly negatively affected.
Third, continue to strengthen brand building and increase the scale of users. In view of the high-end orientation of elite education, word of mouth has always been an important way to get customers. Zuo Hong once said that about 70% of the customers of elite education come from word of mouth and repurchase every year, of which 40%+ comes from repurchase renewal fee and 20%+ comes from recommendation.
In addition to the Go Premium strategy, Elite also plans to take the OMO model as a long-term development strategy. Zhang Xi predicts that the revenue of Elite Online is expected to increase fivefold this year, reaching 654.38+billion yuan, and the proportion of the total revenue will increase from 5% to 20%-25%.
The top management of the enterprise has shown idealized expectations for the company's future sales and ASP.
Zhang Xi, the founder of Elite, said at the earnings conference that Elite's goal is to achieve sales of 654.38 billion yuan and 30 billion yuan by 2023 and 2026, respectively, which is equivalent to 2.7 times and 8. 1 times of FY20. Due to rising product prices, ASP is expected to triple in three years.
However, at present, the shares of elite education have frequently fallen, and the latest share price is only 3.6 1 USD/share. The latest market value of 583 million is also far from the bright future of 244.358 billion and 488.8438+0 billion in New Oriental. Although the high-end strategy of elite education is conducive to the differentiation of its products in the highly competitive market and occupy the high-end market position. But at the same time, its sales scope is also facing the ceiling. How to realize the continuous growth of the number of customers will be an important task for elite.