It has been nearly a year since the " double reduction " policy was implemented. The transformation path of K12 education and training enterprises has gradually become clear, aiming at vocational education, quality education , private higher education, education informatization and other fields.
How has the company's transformation performed in this year?
1
Reducing expenses has become mainstream
It is still difficult to say that the transformation has been successful
A year ago, K12 education and training companies generally emphasized economies of scale. Market first, crazy expansion, and continuous losses were the main themes. Judging from the performance of more than 10 listed education companies focusing on K12 business, high marketing expenses and customer acquisition costs, as well as too low user retention, have resulted in only a handful of companies being able to achieve stable profits.
In July 2021, with the implementation of the “double reduction” policy, the money-burning expansion model came to an abrupt end, and K12 education and training companies began to seek transformation.
We found that this transformation is mainly concentrated in three aspects, the most common of which is concentrated in the education and training segmented track, such as vocational education and quality education; followed by education informatization, including educational intelligent hardware and SaaS software Services and cultural services, etc.; in addition, it also includes expansion and attempts in new fields, such as live streaming e-commerce, etc.
On one side is the subject training business that has shrunk significantly, and on the other side is the new business that has not yet formed a scale.
In the third and fourth quarters of last year, many K12 education and training companies experienced sharp declines in revenue and widening losses. However, judging from the first-quarter results released by some companies this year, profits or net losses have begun to narrow. Among them, Gaotu, Education Technology , Xueda Education , etc. all achieved profitability.
In the first quarter of this year, Gaotu achieved a net profit of 53.72 million yuan, compared with a net loss of 1.43 billion yuan in the same period of 2021; the net loss of Yiyi Education Technology narrowed to 24.8 million yuan, a significant decrease from the loss of 660 million yuan in the same period last year, achieving economic success. The adjusted net profit was 9.9 million yuan, which was the company's second consecutive quarterly profit after the fourth quarter of last year; Xueda Education achieved a net profit of 1.17 million yuan. Although non-net profit was deducted to -4.9 million yuan, it was still higher than the same period last year and the third quarter. Things improved significantly in the third and fourth quarters.
In addition, companies such as 51Talk and NetEase Youdao also reported significant profits or narrowed losses in their transformation businesses in the first quarter of this year.
It is difficult to say which company has successfully transformed. Although the performance of individual companies seems to be profitable, this is achieved by reducing expenses and other means. It is not a sustainable model in itself. It still depends on its cash flow and the income of its main business. In the next two to three years, only when performance continues to grow, business needs are strong, and customers form a considerable base can we call it healthy. Said Feng Bin, Distinguished Practice Professor at Shanghai International Chief Technology Officer College and Nanjing University MBA part-time tutor.
Overall, the transformation has not yet been successful. Those companies that have switched to vocational education are actually not competitive and cannot compete with the brands that have been in the field of vocational education before. Soochow Securities chief analyst Wu Jincao said.
2
Registration for quality education and training institutions is not optimistic
On June 24th and 25th, at the New Oriental Youneng Middle School Education and Xueda Education Yuetan Learning Center in Xicheng District, Beijing, New Oriental announced that it had been Stop offline teaching. Xueda Education’s announcement shows that it was suspended in March this year due to the impact of the epidemic, but the relevant internal teaching facilities are still complete.
Summer is approaching, and the situation of quality education and training institutions is not optimistic. The reporter visited 5 quality education institutions in Tongzhou District, Beijing, including basketball, musical instruments, eloquence, art and programming. Among them, the basketball training institution is currently closed due to epidemic prevention and control. The reporter contacted its founder by phone and he said that enrollment has been tepid during the epidemic. The programming training institution performed relatively well, and there were parents in the lobby waiting for their children to finish class.
Eloquence training, musical instrument training and art training institutions are also open, but with fewer students. The relevant person in charge said that the current focus is mainly on maintaining old students, and it is difficult to recruit students. Compared with before the "double reduction", the number of new students has decreased by one-third.The reason is that after the implementation of the double reduction, the school has extended the time for students to stay in school, providing Relevant quality training courses, while superimposing the impact of the epidemic.
The person in charge of an offline training institution located in Pinggu District, Beijing, said that the company is currently in a loss-making state and originally hoped to make a profit during the summer vacation. However, the registration and consultation situation this year was obviously not as good as in previous years, and the repurchase situation is not ideal. Parents are generally worried that institutions will close or the epidemic will prevent classes from being held.
Some parents said that their children study in public primary schools. After school in the afternoon, the school arranges comprehensive development courses, including large clubs, moral education, intellectual education, physical education, aesthetic education, labor education, and academic tutoring. 45 courses. Some parents told reporters that their children's school arranged special courses such as photography, badminton, basketball, calligraphy and seal cutting, choir, etc., and also arranged self-study classes in the evening. It can be seen that the quality education work in the school is being carried out in an orderly manner.
3
Can the vocational education track carry the transformation of K12? In the months after the double reduction was implemented, policies related to vocational education were introduced one after another.
For example, the "Regulations on the Implementation of the Private Education Promotion Law of the People's Republic of China" has been officially implemented on September 1, 2021, and has determined the country's policy of encouraging enterprises to organize vocational education at the regulatory level. In October 2021, the General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Promoting the High-Quality Development of Modern Vocational Education", requiring vigorous promotion of the high-quality development of modern vocational education and encouraging listed companies and industry leading enterprises to organize vocational education Education, and encourage all types of enterprises to participate in vocational education in accordance with the law. The newly revised Vocational Education Law of the People's Republic of China will come into effect on May 1, 2022. It will focus on the integration of industry and education, school-enterprise cooperation, support social forces in organizing vocational schools, and promote vocational education and general education. Provisions will be made on aspects such as integration and mutual recognition of results.
Monitoring data from the Internet Economic Society’s large database Dianshubao shows that the number of online vocational education financing in China in 2021 was 38, with a financing amount of 6.193 billion yuan, while the number of financing in 2020 was 15, with a financing amount of 1.71 billion yuan, regardless of quantity The amount has also increased significantly. From January to April 2022, 53 companies in the education industry received financing, nearly half of which were vocational education companies.
Driven by policy and demand, some K12 organizations are turning the ship around.
NetEase Youdao has specially established the Youdao Adult Education Division, which integrates Youdao's premium courses for adult education, NetEase Cloud Classroom , China University MOOC and other businesses and teams, and concentrates resources on the research and development of adult education courses. Good Future launched the adult education brand Qingzhou, which has three sub-brands: Qingzhou Postgraduate Entrance Examination Help, Qingzhou Examination Full Score and Qingzhou Study Abroad, covering three fields: postgraduate entrance examination, language training, and study abroad. Gaotu has also completely divested its K12 subject training business and fully transformed into areas such as adult training and vocational education. Its business covers quality education and training, adult education and training, vocational education and training, overseas study services and intelligent learning services.
Chen Liteng, a digital education analyst at the E-Commerce Research Center of NetEase, believes that vocational education is a golden track recognized and supported by the state. Among them, the non-academic vocational education sector is the focus of all parties.
But can the vocational education track carry so many companies? An investment institution person told reporters that compared with the K12 track, vocational education has never been a strong money-attracting industry. Its overall revenue and profit levels are lower, and its presence is weaker.
reporter According to Flush Industry Classification statistics, there are currently 21 education stocks in A-shares. Among them, companies mainly engaged in non-academic vocational education include Zhonggong Education , Chuanzhi Education and ST Kaiyuan. However, judging from performance performance, in the first quarter of 2022, only Chuanzhi Education, which focuses on IT training, achieved year-on-year growth in revenue and net profit.
In fact, since this year, the two former star companies in the field of vocational education have been pushed to the forefront of public opinion. In March, the boss of million university , which is known as China's first online university , was accused of taking money and running away. , which is heavily advertised, is also facing a wave of layoffs this year. Insiders at Kaikeba explained that some employees will be optimized every year to help the company reduce costs and increase efficiency.
Judging from the current transformation results, the vocational education business has not been able to support the expectations of K12 institutions.
For example, after transforming into vocational education, Gaotu turned a profit in Q4 of 2021 and remained profitable in Q1 of 2022. However, the revenue scale of these two quarters fell sharply year-on-year, with revenue in Q1 of 2022 falling by more than 60% year-on-year. There are also listed companies that have finally "saved" profits and turned around losses after reducing sales and marketing expenses. Taken together, for the vocational education industry, it may be difficult for a company like K12 to emerge with a market value of 100 billion yuan. After the implementation of the
double reduction, many subject training institutions transformed into non-academic vocational education, and industry competition intensified. In this context, how to quickly form a competitive advantage and establish a sustainable and large-scale profit model has become an issue that companies need to consider. Chen Liteng said that for enterprises, building reputation is crucial. Only by laying a good brand foundation and improving brand premium capabilities can they better acquire and convert customers.
Dean of the 21st Century Education Research Institute Xiong Bingqi said that entering vocational education must be about education, not big business. K12 institutions, in particular, must learn lessons from the development and governance of subject-based institutions and not repeat the same mistakes. The rush to enter vocational education will, on the one hand, intensify the competition among the original institutions, and the profit prospects are not optimistic; on the other hand, it is likely to intensify the involution of new into . When this situation occurs, regulatory authorities will inevitably take action. Governance.
4
Transformation results are relatively slow
Need to take a long-term view
K12 The transformation of education and training enterprises shows three characteristics: lack of preparation, transformation requires long-term preparation and accumulation of energy, these enterprises have not prepared in advance; lack of ability, transformation requires corresponding technology and ability support , some companies do not have the ability to quickly open up in new fields in the short term; they lack patience, and transformation requires mid- to long-term planning of 3 to 5 years. At present, companies are generally still impatient. Yu Hongze, an expert in the education industry and director of the Deren Micro Course Research Institute, told a reporter from Securities Daily that the more fundamental reason is that companies pay too much attention to the short-term micro factors that affect their development, while ignoring the long-term macro factors that affect their development. .
Therefore, if K12 education and training companies want to develop further, they need to have a keener insight into the macro factors that affect their long-term development, and at the same time reconstruct the development theory. First of all, we must clarify the center: whether to seek survival or development. After establishing the direction, you need to think about three points - clarify development principles, transfer or rebuild core capabilities, and prepare for long-term development.
In this regard, Yu Hongze proposed several transformation directions: first, focus on segmented groups and focus on specialization and special new ; secondly, according to the macro direction of the country’s demand for future vocational and technical talents, cultivate knowledge and skills. Talent; in addition, the direction of integration with technology may become a breakthrough, such as entering the education scene through integration with the metaverse.
Feng Bin believes that K12 education and training companies have strong product design capabilities, Internet technology capabilities, customer service capabilities and marketing capabilities. It is difficult for traditional vocational education institutions to have the global resource integration capabilities of K12 education and training companies. It is also difficult to teach tens of thousands of people at ultra-low cost.
Yu Hongze said that although existing vocational education companies have developed to a certain stage, there are still many areas beyond their capabilities. Therefore, top companies in various industries need to participate, such as Huawei , Baidu , New Oriental, TAL and other leading companies, so as to add scenario-based technology, capital, talents, etc. to vocational education.
Generally speaking, compared with the rigidly needed and standardized K12 track, in the current new track, it is difficult to achieve standardization in both quality education and vocational education, and it is also difficult to achieve scale effects. The transformation results of various K12 education and training companies are relatively slow. After experiencing a huge trough, it remains to be seen whether K12 education and training institutions can usher in disruptive new development ideas in the future.
