17 Education & Technology Group Inc. (NASDAQ: YQ) ("17EdTech" or the "Company"), a leading education technology company in China with an "in-school + after-school" integrated model targeting K-12 students, announced its unaudited financial results for the first quarter ended March 31, 2021.
Source: 17Edtech's First Quarter 2021 Financial Report
According to the report, net revenues were RMB474.2 million (US$72.4 million) for Q1 2021, a year-over-year increase of 107.1%. Net revenues of online K-12 tutoring services(accounting for 97.6% of total revenues) were RMB463 million, up 118.0% from the same period in 2020. Gross billings of online K-12 tutoring services were RMB603.5 million, up 125.7% year-over-year. Paid course enrollments were approximately 543,000, compared to approximately 264,000 in Q1 2020, representing a yearly growth rate of 105.7%.
For this quarter, the average MAUs of in-school applications for students (the number of users that logged in to the in-school applications in that month at least once.) was 18.9 million, compared to 20.0 million in the last quarter. "The MAUs of our in-school applications for students also demonstrated strong resilience among the latest changes in regulatory environment. We are still confident that the room for growth of our in-school applications for students remain strong in the next few years." Mr. Andy Liu, Founder, Chairman and Chief Executive Officer of 17EdTech commented.
In Q1 2020, cost of revenues was RMB187.6 million (US$28.6 million), up 128.3% year-over-year, driven by increases in compensation costs for instructors and tutors and teaching material costs as a result of hiring more tutors to prepare for the expected growth in enrollments in the 2021 spring semester. As a result, gross margin for Q1 2021 was 60.4%, compared with 64.1% in Q1 2020.
As for the bottom line, net loss for Q1 2021 was RMB659.7 million(US$100.7 million), surged by 194.2% year-over-year, primarily due to the high level of total operating expenses. Total operating expenses were RMB953.1 million for Q1 2021 from RMB374.6 million for Q1 2020, representing an increase of 201.0%. Sales and marketing expenses(accounting for 64.4% of total operating expenses) rose 129.4% as the Company enhanced its sales and marketing efforts to propel the growth of the Company's after-school tutoring services. This was consistent with the fact that the number of new enrollments converted in winter 2021 more than doubled that in winter 2020, according to the report.
As of March 31, 2021, cash and cash equivalent were RMB 2,240.3 million (US$341.9 million), compared with RMB2,835.0 million as of December 31, 2020.
Public listed in the US stock market in December 2020, 17EdTech provides a smart in-school classroom solution that delivers data-driven teaching, learning, and assessment products to teachers, students, and parents across over 70,000 K-12 schools. The company also offers online K-12 large-class after-school tutoring services that complement students' in-school learning.
For Q2 2021, the Company expects to generate net revenues of RMB640.0 million and RMB660.0 million, representing 135.8% to 143.2% increase from Q2 2020.