Monday, March 30, 2020

China's Online Learing Market Surges: 51Talk Inside View

The online education market is booming in China, as the coronavirus has kept schools and campuses closed.
One beneficiary of this trend is China Online Education, otherwise known as 51Talk. The Beijing-based company that is listed on the NYSE has been growing very fast. It's poised to continue on that growth curve as awareness grows about how online learning can work.
Silicon Dragon interviewed CFO Min Xu to learn more about how 51Talk is keeping ahead in China. Edtech is increasing globally by about 11 percent annually and projected to reach $341 billion by 2025, according to HolonIQ in its Global Education Outlook.  China's market is growing the fastest worldwide, by 20 percent per year. The sector has been attracting loads of venture capital investment, reaching nearly $1.7 billion in 2019 across 105 deals in the U.S., according to edtech tracker EdSurge. China claims four of the five largest edtech investments in the world.
Big Op in China
In China, a large opportunity beckons since penetration is still low, in the single digits, according to Xu.
That is changing rapidly as more students and teachers get used to remote learning.
At 51Talk, first quarter 2020 revenues are poised to surge 40 percent over Q1 in 2019, he noted. It's currently delivering 140,000 lessons per day at its peak and so far "the system has survived the traffic," said the CFO, who is based in the U.S. and speaks perfect English.
Moreover, if current trends continue, the edtech company that went public in 2016 could break even this year, he added. On its board are two leading venture capitalists who backed the company: Hurst Lin, general partner of DCM and Wei Li, an executive director at Shunwei Capital.
Key to continued growth in the market is differentiation with other contenders in this space in China including AI-driven edtech company LAIX and VIPKid.
The core business at 51Talk is K-12, one-on-one lessons in English language learning and focused on smaller cities, outside the ring of Shanghai and Beijing unlike VIPKid. Looking to increase efficiency, 51Talk plans to also emphasize small classes of four to six students with lessons taught by Filipino teachers.
Investors are paying attention, and the stock price has gone up from $4 to $36 in a 10-month period ending early March, before the big overall market drop.