Meten EdtechX Education Group Ltd. (Nasdaq: METX) (“Meten” or the “Company”), one of the leading omnichannel English language training (“ELT”) service providers in China, released its unaudited financial results for the second quarter and the first half-year ended June 30, 2021.
According to the report, revenues were RMB204.8 million ( US$31.7 million) in Q2 2021, an increase of 8.2% year-over-year. In the first half of 2021, revenue amounted to RMB 411.3 million, an increase of 10.9% year-over-year, mainly driven by the strong rebound in gross billing after the impact of COVID-19 faded.
Gross profit in were RMB66.2 million(US$10.2 million) for Q2 2021, increased by 23.4% year-over-year, primarily as a result of the improvement of gross billings and operational efficiency. Gross profit margin was 32.3% for this quarter compared to 28.3% for Q2 2020. Adjusted net loss was RMB75.7 million(US$11.7 million), which dropped by 16.2% year-over-year.
Revenues for Meten include General adult ELT, Online ELT, Overseas training services, and Junior ELT. In Q2 2021, revenues for General adult ELT were RMB79.3 million, up 38.3% year-over-year. Revenues for Online ELT(Likeshuo) were RMB60.9 million in this quarter, down 23.1% year-over-year. Revenues for Overseas training services rose by 97.4%, reaching RMB37.0million.
For Junior ELT, revenues decreased from RMB31.6 million in Q2 2020 to RMB23.1 million (US$3.6 million) in the second quarter of 2021. Revenue for Junior ELT under the “Meten” brand increased by 256.3% year-on-year in Q2 2021 to RMB21.4 million, driven by investment and new product development. In Q2 2021, due to regulatory mandates, all off-campus training institutions suspended their business operations in Beijing, and the revenue for Junior ELT under the “ABC” brand decreased by 93.3% year on year.
In Q2 2021, operating expenses were RMB143.7 million(US$22.18 million), compared to RMB144.4 million for Q2 2020. In this quarter, selling and marketing expenses rose by 8.9% year-over-year to RMB77.1 million. Research and development expenses declined by 59.3% year-over-year to RMB3.3million. General and administrative expenses decreased by 3.3% year-over-year to RMB63.2million.
Meten held RMB144.2 million (US$22.3 million) of cash and cash equivalents by the end of Q2 2021, compared to RMB90.1 million as of Dec. 31, 2020.
For the product development, in Q2 2021, Meten launched new products across both its offline and online platforms, including three new language (Japanese, Spanish and Korean) products.
As of Jun. 30, the Company has 102 learning centers in operation. The financial report shows that the Company closed eight offline learning centers by the end of Q2 2021 to optimize the layout of offline centers.
As of Jun. 30, 2021, the number of registered users for online courses reached 1.9 million, up 19% year-on-year, and the number of registered junior students for Junior ELT under the "Meten" brand grew by 240.9% year-on-year.
Alan Peng, CEO of Meten EdtechX commented that the Company has made many business adjustments and optimizations to achieve its long-term operational objectives. "We have transferred all offline courses to online courses and will allow all offline students to schedule online synchronized courses in September. We plan to gradually reduce our offline learning centers to 1-2 in each city and make these centers become learning and communication platforms for students, which can greatly reduce the fixed cost and increase profit margins." Launching low-cost and high-profit Philippine foreign teachers’ courses is one of the approaches to reduce corporate operational risks.
In addition, to meet the diverse learning needs of young people in the Chinese workplace, Metan provides diversified online courses suitable for adult career development, such as marketing, management, finance, communication skills, EMBA.
On Sept. 2, 2021, Meten priced its public offering of 200 million ordinary shares at $0.3 per share, representing a 67.4% discount to its closing price of $0.92 on Sep.1, 2021. The offering is expected to close on Sept.7. The proceeds will be used for capital expenditure, general corporate and working capital needs. Meten shares plummeted on the discounted equity offering and closed at $0.34/share on Sep.2, 2021.