Shanghai River, once a unicorn in online education, is ushered in its darkest moment. Its situation also reflects the plight of the entire online education. Regardless of whether a gambling agreement was signed in the previous round of financing, or the current overall economic environment, the performance of the Hong Kong stock market, the characteristics of the education industry, high sales costs, and bloated internal organizations, it cannot be avoided.
According to the IPO, the national corporate credit information publicity system showed that Shanghai Jiangjiang Education Technology (Shanghai) Co., Ltd. (“Shanghai”) had a stake plunge on July 4, and the pledgor was Shanghai Chengta Enterprise Management Consulting. In a partnership (limited partnership), the pledgee is Anhui Xinhua Media Co., Ltd., and the amount of pledged equity is 8.905 million yuan.
According to the data of Tian's eye inspection, Anhui Xinhua Media Co., Ltd.'s investment entity, Anhui Xinhua Media, is also one of the investors in the D round of financing in Shanghai in 2015. Shanghai Chengta's number of pledged shares is not high, accounting for only 0.178% of Hujiang Company. Shanghai Chengta holds a total of 3.5% of Hujiang.
However, it is worth noting that Shanghai Chengta is a rewarding stock holding platform for employees. The pledge of equity means that certain terms of the betting agreement between Hujiang and Wanxin Media have been activated. For example, whether management reaches a certain target and decides the outcome of betting. Obviously, pledge of equity to shareholders means that management needs to pay for the completion of a certain target.
But before that, on April 8, 2019, Shanghai Jiangjiang also had a pledge of equity. The pledgor was Shanghai Hujie Investment Management Center (Limited Partnership), and the amount of pledged equity was 12,373.7236 million. Hujie Investment holds 31.99% equity interest in Hujiang. At the same time, Fu Cairui, the legal representative, chairman and general manager of Hujiang, is also a major shareholder of Hujie Investment.
In the winter of capital, the wind of Internet layoffs has blown into the field of online education. On March 6, a "Hujiang layoffs of 1,000 people, a ratio close to 50%" broke the ??百乐宫网上游戏??. Subsequently, there were successive ??百乐宫网上游戏?? about the failure of listed bets, wage reductions and layoffs, and the overdue fulfillment of Wanxin Media's repurchase obligations. At the same time, Hujiang responded to the rumors of "layoffs" on the Internet and had previously signed a listing bet agreement with investors.
Sign a listing and gambling agreement with an investor?
Hujiang Online School submitted the prospectus to the Hong Kong Stock Exchange last July, and updated it again at the end of last year. Due to the bleak performance of the secondary market, the rush to an IPO can only result in a "blood" listing, and the process of listing in Shanghai and Shanghai has been repeatedly delayed.
According to the prospectus, the company has experienced 9 rounds of financing since its establishment, and the total amount of financing has reached 1.6 billion yuan. In the E round of financing completed in 2018, the valuation of Hujiang has more than doubled from the previous round of valuation, reaching 15.95 billion yuan. In the ??百乐宫网上游戏?? from the Internet, "listing to gamble failed" is one of the reasons for this online education unicorn company to lay off employees.
Since then, the listing process in Shanghai has stalled. At the time, a person familiar with the matter said that the reason for the delay in listing was that the roadshow to institutional investors was not smooth at the current stage, and the market response was not as expected.
However, according to the announcement of the agreement released by Wanxin Media in October 2015, Wanxin plans to subscribe for about 267,000 new shares in Hujiang with an investment amount of about 100 million. However, "If Hujiang cannot complete the listing and issuance by the end of 2018, Repurchase the shares held by investors at the repurchase price. The repurchase price is the sum of the investment price plus 10% compound interest per annum. "
No doubt, no matter what the terms of other rounds and shareholders are, at least the transaction terms signed by Anhui New Media and Hujiang have gambling implications.
Uncertain profit model
In 2009, Hujiang launched its flagship product, Hujiang Online School. Relying on Hujiang.com to sell its own brand courses, which became one of the main sources of profit for Hujiang.com. Hujiang's prospectus shows that charging sales fees to trainees through selling and managing private-label courses is a major source of company revenue. In the first 8 months of 2018, revenue from private label course business accounted for 98% of total revenue.
However, according to the prospectus submitted by Hujiang, Hujiang's revenue has increased year by year, from 185 million, 340 million, and 555 million from 2015 to 2017, and the revenue of the first eight months of 2018 was 436 million, but the company's profitability Worrying. From 2015 to 2017, Hujiang's three-year loss totaled more than 1.2 billion, and the loss continued to expand. The annual loss for the year ended August 31, 2018 was 863 million yuan, which exceeded the 537 million loss for the whole year of 2017. Will continue to lose money.
Another noteworthy figure in Hujiang's financial information is its gross profit margin. In the past four years, the gross profit margin of sales brand courses has exceeded 50%. In 2017, this figure was close to 60%, and in the first 8 months of 2018, the gross profit margin became 61.2%.
There is a steady increase in business revenue, and gross profit margins have continued to rise. Why is Hujiang still losing money for years? The prospectus shows that in recent years, the largest investment of Shanghai University has been in three areas: research and development, advertising and marketing. But R & D investment has narrowed in the past two years, while sales and advertising have been huge. Among them, Hujiang ’s spending on advertising promotion has increased by 200% in just two years. Continued investment in selling expenses and distribution expenses directly resulted in negative operating cash flow of Hujiang in the past two years.
Another business that Hujiang Education may become the main source of future revenue is the CCtalk platform, which was established in 2016. The CCtalk platform provides Internet education technology and platform services to various education practitioners. Users include teachers, corporate customers, educational institutions and government agencies. However, there are some hidden dangers in the CCtalk model. Compared with the comprehensive packaging of B2C model online education for courses and teachers, the platform itself has limited service guarantees for users. The courses are mainly completed independently by the admission institutions and teachers. It is difficult to guarantee user retention. Moreover, although online education platforms can also introduce star teachers with their own traffic, the ultimate independent development of star teachers has become the norm. For CCtalk, the most typical example is Zhou Sicheng's withdrawal from the platform and its independent development shortly after he settled in CCtalk.
On the CCtalk platform, teachers' income is also lower .
According to the prospectus data, as of the end of 2016 and 2017, the total net transaction volume of CCtalk was 3.8 million yuan and 235.7 million yuan. According to 2017, CCtalk platform paid users were 255,298, and the per capita payment was 923 yuan. The average annual average of each teacher The course income is less than 6,000 yuan, which does not include the platform costs that may be separated by Shanghai. This shows from the side that the benefits of CCtalk to teachers are limited, and there may not be many teachers willing to output high-quality courses on this platform.
From it, we can see that Hujiang's biggest problem is weak profitability, although Hujiang stated in the "risk factors" that if it fails to continue to attract students to register for Hujiang's private brand courses, or fail to improve its own brand The expenses of course participants or paying users of online courses on the CCtalk platform will adversely affect business performance.
Beginning in early 2019, the Hujiang adult English business Hitalk, which was full of posters on the Shanghai Metro two years ago, was almost cut off. Its real-time interactive education platform CCtalk was also the hardest hit area for layoffs. Hujiang invested in CCtalk. It has reached 330 million yuan, but its total revenue is less than 2 million. It is the most important expenditure business of Shanghai in the past three years.
So far, Hujiang has laid off more than 1,000 employees. The prospectus in August last year showed that its total number of employees was nearly 2,200. It is reported that in the future, this number will be controlled at about 1,000 people. At the same time as the large-scale layoffs, Hujiang after the listing failure also faces the loss of backbone forces across the board.
In recent years, as a popular entrepreneurial direction of online education +, capital has given a variety of business expectations, but high investment, low return, "burning money" to maintain the operating model has been unavoidable.
Once the online education unicorn Hujiang encountered "failure to go public" and "continuous losses", it could only relieve its financial pressure by pledged equity. It can be seen that the lack of its own profit model in the early stage depends on the advance payment of tuition and some financing to survive. Scheme. Right now, if you want to survive, finding your own profit model is the key.