On May 17, 2021, China online Education Group(NYSE: COE) ("51 Talk" or the "Company), a leading online education platform in China with core expertise in English education, announced its unaudited financial results for the first quarter ended March 31, 2021. 

According to the report, net revenues for Q1 2021 were RMB600.4 million(US$91.6 million), a 23.3% increase year-on-year, driven by the rise in the number of active students, rising 37.0% from the same quarter last year. 

The K-12 one-one-one mass-market offering was the primary revenue resource, accounting for 91.5% of the total net revenues. It surged 36.0% year-over-year, hitting RMB549.6 million. On the other hand, for the K-12 small class offering and Others, their net revenues declined by 19.8% and 45.8%, respectively. 

The gross margin for Q1 2021 was 73.4%, compared with 70.4% for Q1 2020, mainly due to the increase in price per lesson. 

GAAP Net income achieved positive for five consecutive quarters starting from Q1 2020 but dropped 85.6% to RMB8.0 million year-over-year. The sharp downwards mainly attributed to the 41.6% year-over-year increase in the total operating expenses where sales and marketing expenses were RMB318.9, a rise of 38.7%, and product development expenses were RMB57.7, an increase of 60.9%, compared to Q1 2020. 

The net margin for Q1 2021 was 1.3%, compared with a net margin of 10.4% for the same quarter last year. 

Operating cash inflow was RMB39.0 million, compared with RMB172.7 million cash inflow for Q1 2020. Although the cash inflow was not as strong as the previous seven quarters, the cash balance consisting of cash, cash equivalents, time deposit, and short-term investments was still sufficient, reaching RMB 1730.3 million as of March 31, 2021. 

In March and April, 51Talk acquired AI formative English education application Gkid and Chinese reading ability assessment and training application Koala Read. On its tenth anniversary celebration in March, Jack Huang announced to develop a competency-based English education system focusing on K-12 students. The system upgrade covers several aspects, including technology, product, services, and teaching research and development. In Q2 2021, 51Talk will launch its first formative education product matrix.

For the second quarter of 2021, the Company expects to generate net revenues between RMB597 million and RMB603 million, representing 21.0% to 22.2 % increase from RMB493.5 million year-on-year.