2020 is destined to be an extraordinary year. An epidemic has brought the education industry that was originally in the “cold winter” into the “ice age”. Many educational institutions are forced to close offline stores and switch from offline to online teaching. Companies are facing difficulties with lack of cash also to solve the problem of lack of online teaching experience. Every problem is fatal. Under the influence of the epidemic, the reshuffle of the education industry has intensified.
There is a chance when there is danger. In the desperate situation, some educational institutions make their way through the headwinds. Alan Peng, Chief Executive Officer of Meten EdtechX was interviewed on media.
The epidemic has accelerated the development of online businesses
In the past, traditional education institutions have been very conflicted about online teaching, want to conquer it, but also afraid of failure. The epidemic prompts institutions to stop hesitating. The closure of offline stores forced educational institutions to develop online teaching services.
Alan Peng thinks, the impact of the epidemic on the education industry should be viewed dialectically. While the epidemic has intensified the industry reshuffle, it also provided opportunities for mergers and acquisitions; at the same time, the arrival of the epidemic has accelerated the development of online education services of educational institutions.
Unlike most traditional educational institutions that are forced to carry out online teaching, although Meten EdtechX is an established leader in the adult English language training （ELT ）subdivision field, Meten EdtechX has begun to deploy online business very early. “Likeshuo” was founded in 2015, and it has been iterating over the past four to five years. The mobile terminal was launched in 2016; in 2017, the production line of English for youth was established and became the top three in the blueberry evaluation list; the smart robot and dual-teacher products were launched in 2018; and the official cooperation with TESOL was launched in 2019. This year, “Likeshuo” 5.0 system was launched, APP 3.0 was launched, and the online Japanese learning platform JTalk was also launched.
Due to the epidemic this year, Meten EdtechX has accelerated the development of its online business. According to the Q3 2020 and 2021 Guidance released by Meten EdtechX, its online ELT platform, continues to deliver a strong post-pandemic performance in terms of both growth and profitability, achieving a 54% increase in the number of registered users and a 22% increase in gross billings in Q3 2020 vs Q2 2020. The Company’s online ELT business targets approximately RMB340 million in revenues by the end of 2020, representing a 30% increase compared to the full fiscal year of 2019 and approximately RMB16 million of net profit (vs RMB1.5 million for the previous year). Meten EdtechX’s omnichannel platform and rising Likeshuo brand awareness continue to provide the Company with a competitive advantage in terms of customer acquisition.
Long-term optimistic about the education industry
Alan Peng thinks, as one of the few domestic industries with high growth, strong demand and anti-cycle, the education industry has huge market increment space.
Indeed, the future of the adult ELT market has no shortage of driving forces.
Increased employment pressure has led to a rapid increase in the number of postgraduate entrance examinations. Economic globalization and the “Belt and Road Initiative” have also created a demand for internationally qualified talents. Furthermore, the improvement of online education and its supporting infrastructure will help develop a larger market. These have become accelerators for the adult ELT market. In addition, the practical ELT market has a penetration rate of 8% among urban adult Internet users, there are hundreds of billions of market space and the competition is relatively mild. Once the threshold for adult ELT consumption is lowered, a large number of users will emerge. At the same time, exposure of industry issues also brings opportunities for mergers and acquisitions.
No matter the overall industry size or market activity, the Chinese education industry is in the stage of expansion and K12 is the best. In terms of industry development trends, basic education is composed of school education and extracurricular tutoring organization education, which is borne by the government. The extra school education is the supplement of school education, and the cost of this part is borne by the family. The development of k12 education industry has four characteristics: large amount, intensive competition, separation and continuity. With the increasing attention of parents and students to English learning, the market demand of English education for young children is gradually released, which is a potential field in the K12 online education industry.
Meten EdtechX acquired ABC education group in 2018, thus entering the field of youth ELT.
Meten EdtechX’s Junior ELT Revenue in the third quarter 2020 was 124 million RMB, an increase of 69% from the previous quarter, and the gross billings increased by 89% from the previous quarter. At the same time, Meten EdtechX found that the repurchase rate of Junior ELT is significantly higher than that of adult ELT.
In addition, the Meten EdtechX’s youth ELT recovered to 87.2% of the same period last year in September and 148.6% of the same period last year in October. It is worth noting that among the performance sources, renewal performance and referral performance from existing trainees accounted for 54% of the total performance. This fully shows that the courses provided by Meten EdtechX are of high quality, good reputation and high user stickiness.
Meten EdtechX’s youth ELT is committed to providing full-process high-quality English learning and training services for domestic young people aged 3-18, from the development of interest in the enlightenment stage of English learning, to the improvement of concentration ability and test scores, to the systematic English learning process. At the same time, in order for every student to fully interact with teachers and classmates in the classroom, Meten EdtechX’s youth ELT adopts a small class teaching model of 6-12 people, which is rare in offline English training institutions, so as to learn more effectively.
Efficient curriculum product design, high-quality Chinese and foreign teachers’ resources, and good pre-school and after-school services are the powerful guarantee for the recovery and even surpassing of the same period last year.
Become a comprehensive education and training platform
Alan Peng thinks, in the global period of the spread of the epidemic, Meten EdtechX is inseparable from the business model of perfect online and offline linkage. He believes that with the higher education level of Chinese people, there are more and more profound understanding of the concept of lifelong learning. In the future, Meten EdtechX should build an all-round education and training platform. Based on the existing adult ELT of Meten EdtechX , some adult ELTs should be transformed, and the existing resources and networks should be used to penetrate from adult education to youth education market. Due to the fast-paced lifestyle, online education is becoming more and more popular. With its strong technology strength, the online and offline resources are integrated, and the business of online education has also been developed rapidly. In the future, the development of online products and courses will be accelerated. It is expected that the proportion of online business will exceed 50% in the next 2-3 years.
Based on the long-term development and taking advantage of the existing advantages, Meten EdtechX association will accelerate the market layout and become a comprehensive education and training platform.
