Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of September 2021

Commission File Number 001-39742

 

 

17 EDUCATION & TECHNOLOGY GROUP INC.

(Translation of registrant’s name into English)

 

 

16/F, Block B, Wangjing Greenland Center

Chaoyang District, Beijing 100102

People’s Republic of China

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F  ☒    Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

17 EDUCATION & TECHNOLOGY GROUP INC.
By:  

/s/ Michael Chao Du

Name:   Michael Chao Du
Title:   Chief Financial Officer

Date: September 24, 2021


EXHIBIT INDEX

 

Exhibit No.

  

Description

Exhibit 99.1    Press Release—17 Education & Technology Group Inc. Announces Second Quarter 2021 Unaudited Financial Results and Change to Board Composition
EX-99.1

Exhibit 99.1

17 Education & Technology Group Inc. Announces

Second Quarter 2021 Unaudited Financial Results and

Change to Board Composition

 

LOGO

BEIJING, China, September 23, 2021 — (GLOBE NEWSWIRE) —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, today announced its unaudited financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights[1]

 

   

Net revenues were RMB670.9 million (US$103.9 million), which exceeded the high-end of the Company’s guidance by RMB10.9 million and represented a year-over-year increase of 147.2% from RMB271.4 million in the second quarter of 2020.

 

   

Net revenues from online K-12 tutoring services were RMB662.0 million (US$102.5 million), representing a year-over-year increase of 163.9% from RMB250.8 million in the second quarter of 2020.

 

   

Gross billings of online K-12 tutoring services[2] (non-GAAP) were RMB769.5 million (US$119.2 million), representing a year-over-year increase of 121.9% from RMB346.8 million in the second quarter of 2020.

 

   

Paid course enrollments[3] were approximately 1,183 thousand, representing a year-over-year increase of 131.1% from approximately 512 thousand in the second quarter of 2020.

 

   

Gross margin was 63.0%, compared with 63.9% in the second quarter of 2020.

 

   

Net loss was RMB266.7 million (US$41.3 million), compared with net loss of RMB169.7 million in the second quarter of 2020.

 

   

Adjusted net loss[4] (non-GAAP), which excluded share-based compensation expenses of RMB48.5 million (US$7.5 million), was RMB218.2 million (US$33.8 million), compared with adjusted net loss (non-GAAP) of RMB149.8 million in the second quarter of 2020. Adjusted net loss (non-GAAP) as a percentage of net revenues was negative 32.5%, compared with negative 55.2% in the second quarter of 2020.

 

[1] 

For a reconciliation of non-GAAP numbers, please see the table captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” at the end of this press release.

[2] 

“Gross billings of online K-12 tutoring services” for a specific period refer to the sum of cash received from each enrollment of the Company’s online K-12 tutoring courses in such period inclusive of the applicable value added tax (“VAT”) and surcharges, net of the total amount of refunds in such period.

[3] 

“Paid course enrollments” for a certain period refer to the cumulative number of paid courses enrolled in and paid for by the Company’s students, including multiple paid courses enrolled in and paid for by the same student.

[4] 

Adjusted net loss represents net loss excluding share-based compensation expenses.

 

1


   

Average MAUs[5] of in-school applications for students was 16.5 million, representing a year-over-year decrease of 24.0% from 21.7 million in the second quarter of 2020. The year-over-year decrease in MAUs was partially attributable to the high level of MAUs in the second quarter of 2020, during which period the schools in China were temporarily closed due to the COVID-19 pandemic, and the students were prompted to engage in more online education as they studied at home, and partially attributable to the implementation of “Notice on Strengthening Cell Phone Management in Primary and Secondary Schools” in certain provinces and cities, that limits cell phone use and prohibits assigning homework on cell phone.

First Half 2021 Highlights

 

   

Net revenues were RMB1,145.1 million (US$177.4 million) represented a year-over-year increase of 128.8% from RMB500.5 million in the first half of 2020.

 

   

Net revenues from online K-12 tutoring services were RMB1,125.0 million (US$174.2 million), representing a year-over-year increase of 142.9% from RMB463.2 million in the first half of 2020.

 

   

Gross billings of online K-12 tutoring services (non-GAAP) were RMB1,373.0 million (US$212.7 million), representing a year-over-year increase of 123.5% from RMB614.2 million in the first half of 2020.

 

   

Paid course enrollments were approximately 1,726 thousand, representing a year-over-year increase of 122.4% from approximately 776 thousand in the first half of 2020.

 

   

Gross margin was 62.0%, compared with 64.0% in the first half of 2020.

 

   

Net loss was RMB926.4 million (US$143.5 million), compared with net loss of RMB393.9 million in the first half of 2020.

 

   

Adjusted net loss (non-GAAP), which excluded share-based compensation expenses of RMB119.4 million (US$18.5 million), was RMB807.1 million (US$125.0 million), compared with adjusted net loss (non-GAAP) of RMB328.5 million in the first half of 2020. Adjusted net loss (non-GAAP) as a percentage of net revenues was negative 70.5%, compared with negative 65.6% in the first half of 2020.

 

   

Average MAUs of in-school applications for students was 17.7 million, representing a year-over-year decrease of 14.9% from 20.8 million in the first half of 2020.

 

 

[5] 

Average MAUs for a certain period is calculated by dividing (i) the sum of monthly active users (MAUs) for each month of such period by (ii) the number of months in such period. MAU for each month is the number of users that logged in to the in-school applications in that month at least once. When calculating MAU, each account is treated as a distinct user.

 

2


Second Quarter 2021 Unaudited Financial Results

Net Revenues

The following table sets forth a breakdown of total revenues by amounts and percentages for the periods indicated (in thousands, except for percentages):

 

            For the three months ended June 30,        
     2020     2021     Y/Y  
     RMB      %     RMB      USD      %    

 

 

Net revenues:

               

Online K-12 tutoring services

     250,839        92.4     662,039        102,537        98.7     163.9

Other educational services

     20,564        7.6     8,853        1,371        1.3     -56.9
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

     271,403        100.0     670,892        103,908        100.0     147.2
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Net revenues for the second quarter of 2021 were RMB670.9 million (US$103.9 million), which exceeded the high-end of the Company’s guidance by RMB10.9 million and represented a year-over-year increase of 147.2% from RMB271.4 million in the second quarter of 2020. The increase was primarily driven by an increase in net revenues from online K-12 tutoring services.

Net revenues from online K-12 tutoring services for the second quarter of 2021 were RMB662.0 million (US$102.5 million), representing a year-over-year increase of 163.9% from RMB250.8 million in the second quarter of 2020, accounting for 98.7% of total net revenues in the second quarter of 2021. The year-over-year increase in net revenues from online K-12 tutoring services was primarily driven by an increase in paid course enrollments. Paid course enrollments for the second quarter of 2021 were approximately 1,183 thousand, representing a year-over-year increase of 131.1% from approximately 512 thousand in the second quarter of 2020.

Net revenues from other educational services for the second quarter of 2021 were RMB8.9 million (US$1.4 million), representing a year-over-year decrease of 56.9% from RMB20.6 million in the second quarter of 2020.

Cost of Revenues

Cost of revenues for the second quarter of 2021 was RMB248.0 million (US$38.4 million), representing a year-over-year increase of 153.1% from RMB98.0 million in the second quarter of 2020. The increase was primarily due to increases in compensation costs for instructors and tutors and teaching material costs as the Company provided services to more students, which increase was largely in line with the growth of the Company’s net revenues from online K-12 tutoring services during the same period.

 

3


Gross Profit and Gross Margin

Gross profit for the second quarter of 2021 was RMB422.9 million (US$65.5 million), representing a year-over-year increase of 143.9% from RMB173.4 million in the second quarter of 2020. The increase was primarily driven by the increase in the net revenues.

Gross margin for the second quarter of 2021 was 63.0%, compared with 63.9% in the second quarter of 2020. The decrease was attributable to the decrease in net revenues from other educational services for the second quarter of 2021.

Total Operating Expenses

The following table sets forth a breakdown of operating expenses by amounts and percentages of net revenues for the periods indicated (in thousands, except for percentages):

 

            For the three months ended June 30,        
     2020     2021     Y/Y  
     RMB      %     RMB      USD      %    

 

 

Sales and marketing expenses

     162,252        59.8     306,731        47,507        45.7     89.0

Research and development expenses

     136,397        50.3     229,535        35,550        34.2     68.3

General and administrative expenses

     45,065        16.6     109,500        16,959        16.3     143.0

Impairment for property and equipment and right-of-use assets

     —          —         56,882        8,810        8.5     —    
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

     343,714        126.6     702,648        108,826        104.7     104.4
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses for the second quarter of 2021 were RMB702.6 million (US$108.8 million), including share-based compensation expenses of RMB48.5 million (US$7.5 million), representing a year-over-year increase of 104.4% from RMB343.7 million in the second quarter of 2020.

Sales and marketing expenses for the second quarter of 2021 were RMB306.7 million (US$47.5 million), including share-based compensation expenses of RMB6.5 million (US$1.0 million), representing a year-over-year increase of 89.0% from RMB162.3 million in the second quarter of 2020. The increase was primarily due to increases in salaries and welfare for sales and marketing personnel, as well as promotional course[6] expenses.

Research and development expenses for the second quarter of 2021 were RMB229.5 million (US$35.6 million), including share-based compensation expenses of RMB12.3 million (US$1.9 million), representing a year-over-year increase of 68.3% from RMB136.4 million in the second quarter of 2020. The increase was primarily due to an increase in salaries and welfare for research and development personnel.

General and administrative expenses for the second quarter of 2021 were RMB109.5 million (US$17.0 million), including share-based compensation expenses of RMB29.7 million (US$4.6 million), representing a year-over-year increase of 143.0% from RMB45.1 million in the second quarter of 2020. The increase was primarily due to an increase in salaries and welfare for general and administrative personnel, which included an increase in share-based compensation expenses.

 

[6] 

Promotional course refers to the online K-12 large-class after-school tutoring courses that are free.

 

4


Impairment for property and equipment and right-of-use assets for the second quarter of 2021 were RMB56.9 million (US$8.8 million), compared with nil in the second quarter of 2020. As a result of the changes in regulatory environment in the online education industry, combined with the Company’s financial performance, the Company performed an impairment assessment on its long-term assets and recognized impairment losses in the second quarter of 2021.

Loss from Operations

Loss from operations for the second quarter of 2021 was RMB279.8 million (US$43.3 million), compared with RMB170.3 million in the second quarter of 2020. Loss from operations as a percentage of net revenues for the second quarter of 2021 was negative 41.7%, compared with negative 62.8% in the second quarter of 2020. The significant improvement was due to improvement in overall operational efficiency.

Net Loss

Net loss for the second quarter of 2021 was RMB266.7 million (US$41.3 million), compared with net loss of RMB169.7 million in the second quarter of 2020.

Adjusted Net Loss (non-GAAP)

Adjusted net loss (non-GAAP) for the second quarter of 2021 was RMB218.2 million (US$33.8 million), compared with RMB149.8 million in the second quarter of 2020. Adjusted net loss (non-GAAP) as a percentage of net revenues was negative 32.5% in the second quarter of 2021, compared with negative 55.2% in the second quarter of 2020.

Please refer to the attached table for a reconciliation of adjusted net loss (non-GAAP) to net loss under U.S. GAAP.

Share Outstanding

As of June 30, 2021, the Company had 493,148,952 ordinary shares issued and outstanding.

Cash and Cash Equivalents

Cash and cash equivalents were RMB2,160.0 million (US$334.5 million) as of June 30, 2021, compared with RMB2,835.0 million as of December 31, 2020.

Deferred Revenue (Current and Non Current)

Deferred revenue was RMB718.4 million (US$111.3 million) as of June 30, 2021, representing an increase of 20.1% from RMB598.3 million as of December 31, 2020. The increase was primarily attributable to our rapid business expansion.

Other Recent Developments

As previously disclosed, the Company’s business, financial condition and corporate structure are expected to be materially affected in future periods by the changing regulatory environment. The overall magnitude of the impact remains uncertain at this time.

 

5


The Company provided updates on new regulations and regulatory development on July 26 and August 25, respectively, which are available at https://ir.17zuoye.com/. The Company encourages investors to refer to the website and original Chinese regulations for details.

Board Change

Mr. Dun Xiao, the Company’s co-founder and director, has resigned from his position as a director of the Company due to personal reasons, effective September 23, 2021.

Business Outlook

Due to the uncertainty related to the recent regulatory and operating environment, the Company decides not to issue guidance in the near term in order to give the management more flexibility to focus on the operations and transformation.

Conference Call Information

Due to the uncertainty related to the recent regulatory and operating environment, the Company will not hold a conference call to discuss the financial results for the second quarter of 2021.

Non-GAAP Financial Measures

17EdTech’s management uses non-GAAP financial measures to gain an understanding of 17EdTech’s comparative operating performance and future prospects. Gross billings of online K-12 tutoring services and adjusted net loss are being used as non-GAAP measurements in evaluating the operating performance.

The Company defines gross billings of online K-12 tutoring services for a specific period as the sum of cash received from each enrollment of our online K-12 tutoring courses in such period inclusive of the applicable VAT and surcharges, net of the total amount of refunds in such period. The Company generally bills its students for the entire course fee at the time of sale of its courses and recognizes revenue proportionally as the classes are delivered over a period typically lasting four months or less. The Company also offers students a content playback service once each of the live tutoring class is delivered. In the content playback service, students have unlimited access to recorded audio-video content of the previous live tutoring classes for three years. The related revenue for playback is recognized proportionally over the playback period. The Company considers gross billings to be a valuable measure for monitoring the sales of our online courses and the business performance of its after-school tutoring services in general.

Adjusted net loss represents net loss excluding share-based compensation expenses and such adjustment has no impact on income tax.

 

6


Gross billings of online K-12 tutoring services and adjusted net loss are used by 17EdTech’s management in their financial and operating decision-making as a non-GAAP financial measure, because management believes it reflects 17EdTech’s ongoing business and operating performance in a manner that allows meaningful period-to-period comparisons. 17EdTech’s management believes that non-GAAP measures provide useful information to investors and others in understanding and evaluating 17EdTech’s operating performance in the same manner as management does, if they so choose. Specifically, 17EdTech believes the non-GAAP measures provide useful information to both management and investors by excluding certain charges that the Company believes are not indicative of its core operating results.

The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect 17EdTech’s income from operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to 17EdTech. Management compensates for these limitations by also considering 17EdTech’s financial results as determined in accordance with GAAP. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP.

Exchange Rate Information

The Group’s business is primarily conducted in China and all of the revenues are denominated in Renminbi (“RMB”). However, periodic reports made to shareholders will include current period amounts translated into U.S. dollars (“USD” or “US$”) using the exchange rate as of balance sheet date, for the convenience of the readers. Translations of balances in the consolidated balance sheets and the related consolidated statements of operations, comprehensive loss, change in shareholders’ deficit and cash flows from RMB into USD as of and for the three months and the six months ended June 30, 2021 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB6.4566 representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on June 30, 2021. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2021, or at any other rate.

About 17 Education & Technology Group Inc.

17 Education & Technology Group Inc. is a leading education technology company in China with an “in-school + after-school” integrated model. The Company provides a smart in-school classroom solution that delivers data-driven teaching, learning and assessment products to teachers, students and parents, covering over 70,000 K-12 schools in 2020.

 

7


Leveraging the Company’s in-school leadership, 17EdTech offers online K-12 large-class after-school tutoring services that complement students’ in-school learning. Powered by its integrated model and technology, 17EdTech’s online K-12 large-class after-school tutoring courses stand out in terms of its unique approach to personalization, realized through a data-driven understanding of individual students’ in-school performance, as well as district-level localized insights.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about 17EdTech’s beliefs and expectations, are forward-looking statements. 17EdTech may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: 17EdTech’s growth strategies; its future business development, financial condition and results of operations; its ability to continue to attract and retain users, convert non-paying users into paying users and increase the spending of paying users, the trends in, size of, and relevant government policies and regulations relating to China’s online education market; its expectations regarding demand for, and market acceptance of, its products and services; its expectations regarding its relationships with business partners; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in 17EdTech’s filings with the SEC. All information provided in this press release is as of the date of this press release, and 17EdTech does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

8


For investor and media inquiries, please contact:

17 Education & Technology Group Inc.

Mr. Raymond Huang

E-mail: ir@17zuoye.com

Christensen

In China

Mr. Eric Yuan

Phone: +86-138-0111-0739

E-mail: Eyuan@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

E-mail: lbergkamp@christensenir.com

 

9


17 EDUCATION & TECHNOLOGY GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of RMB and USD, except for share and per ADS data, or otherwise noted)

 

     As of
December 31,
     As of June 30,  
     2020      2021      2021  
     RMB      RMB      USD  

ASSETS

        

Current assets

        

Cash and cash equivalents

     2,834,962        2,159,971        334,537  

Restricted cash

     170        170        26  

Prepaid expenses and other current assets

     211,448        185,540        28,736  
  

 

 

    

 

 

    

 

 

 

Total current assets

     3,046,580        2,345,681        363,299  
  

 

 

    

 

 

    

 

 

 

Non-current assets

        

Property and equipment, net

     105,223        119,527        18,512  

Right-of-use assets

     200,157        308,724        47,815  

Other non-current assets

     37,782        37,320        5,780  
  

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     3,389,742        2,811,252        435,406  
  

 

 

    

 

 

    

 

 

 

LIABILITIES

        

Current liabilities

        

Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Group of RMB213,481 and RMB270,508 as of December 31, 2020 and June 30, 2021, respectively)

     539,787        559,652        86,679  

Deferred revenue, current (including deferred revenue, current of the consolidated VIEs without recourse to the Group of RMB571,827 and RMB705,782 as of December 31, 2020 and June 30, 2021, respectively)

     596,307        715,513        110,819  

Operating lease liabilities, current (including operating lease liabilities, current of the consolidated VIEs without recourse to the Group of RMB46,835 and RMB74,748 as of December 31, 2020 and June 30, 2021, respectively)

     69,409        112,798        17,470  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     1,205,503        1,387,963        214,968  
  

 

 

    

 

 

    

 

 

 

 

10


     As of
December 31,
    As of June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Non-current liabilities

      

Deferred revenue, non-current (including deferred revenue, non-current of the consolidated VIEs without recourse to the Group of RMB1,982 and RMB2,882 as of December 31, 2020 and June 30, 2021, respectively)

     1,982       2,882       446  

Operating lease liabilities, non-current (including operating lease liabilities, non-current of the consolidated VIEs without recourse to the Group of RMB56,427 and RMB107,801 as of December 31, 2020 and June 30, 2021, respectively)

     118,107       183,352       28,398  
  

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     1,325,592       1,574,197       243,812  
  

 

 

   

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY

      

Class A ordinary shares

     275       277       43  

Class B ordinary shares

     38       38       6  

Additional paid-in capital

     10,653,403       10,772,795       1,668,493  

Accumulated other comprehensive income

     49,614       29,553       4,576  

Accumulated deficit

     (8,639,180     (9,565,608     (1,481,524
  

 

 

   

 

 

   

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

     2,064,150       1,237,055       191,594  
  

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

     3,389,742       2,811,252       435,406  
  

 

 

   

 

 

   

 

 

 

 

11


17 EDUCATION & TECHNOLOGY GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of RMB and USD, except for share and per ADS data, or otherwise noted)

 

     For the three months ended June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Net revenues

     271,403       670,892       103,908  

Cost of revenues (Note 1)

     (97,995     (248,003     (38,411
  

 

 

   

 

 

   

 

 

 

Gross profit

     173,408       422,889       65,497  
  

 

 

   

 

 

   

 

 

 

Operating expenses (Note 1)

      

Sales and marketing expenses

     (162,252     (306,731     (47,507

Research and development expenses

     (136,397     (229,535     (35,550

General and administrative expenses

     (45,065     (109,500     (16,959

Impairment for property and equipment and right-of-use assets

     —         (56,882     (8,810
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     (343,714     (702,648     (108,826
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (170,306     (279,759     (43,329
  

 

 

   

 

 

   

 

 

 

Interest income

     3,115       8,092       1,253  

Interest expense

     (1,705     —         —    

Foreign currency exchange gain

     76       2,808       435  

Other income, net

     (922     2,118       328  
  

 

 

   

 

 

   

 

 

 

Loss before provision for income tax

     (169,742     (266,741     (41,313
  

 

 

   

 

 

   

 

 

 

Income tax expenses

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Net loss

     (169,742     (266,741     (41,313
  

 

 

   

 

 

   

 

 

 

Accretion of convertible redeemable preferred shares

     (447,777     —         —    
  

 

 

   

 

 

   

 

 

 

Net loss available to ordinary shareholders of 17

     (617,519     (266,741     (41,313
  

 

 

   

 

 

   

 

 

 

Education & Technology Group Inc.

      
  

 

 

   

 

 

   

 

 

 

Net loss per ordinary share

      

Basic and diluted

     (10.52     (0.55     (0.09
  

 

 

   

 

 

   

 

 

 

Net loss per ADS (Note 2)

      

Basic and diluted

     (26.30     (1.38     (0.23
  

 

 

   

 

 

   

 

 

 

Weighted average shares used in calculating net loss per ordinary share

      

Basic and diluted

     58,718,662       482,811,981       482,811,981  
  

 

 

   

 

 

   

 

 

 

Note 1: Share-based compensation expenses were included in the cost and operating expenses as follows:

 

     For the three months ended June 30,  
     2020      2021      2021  
     RMB      RMB      USD  

Share-based compensation expenses:

        

Sales and marketing expenses

     4,140        6,519        1,010  

Research and development expenses

     9,155        12,286        1,903  

General and administrative expenses

     6,676        29,713        4,602  
  

 

 

    

 

 

    

 

 

 

Total

     19,971        48,518        7,515  
  

 

 

    

 

 

    

 

 

 

Note 2: Two ADSs represent five Class A ordinary shares.

 

12


17 EDUCATION & TECHNOLOGY GROUP INC.

Reconciliations of non-GAAP measures to the most comparable GAAP measures

(In thousands of RMB and USD, except for share, per share and per ADS data)

 

     For the three months ended June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Net revenues of online K-12 tutoring services

     250,839       662,039       102,537  
  

 

 

   

 

 

   

 

 

 

Add: VAT and surcharges

     15,050       83,507       12,934  

Add: ending deferred revenue

     331,661       685,599       106,186  

Add: ending refund liability

     16,366       38,860       6,019  

Less: beginning deferred revenue

     263,348       691,352       107,077  

Less: beginning refund liability

     3,751       9,124       1,413  
  

 

 

   

 

 

   

 

 

 

Gross billings of online K-12 tutoring services (non-GAAP)

     346,817       769,529       119,186  
  

 

 

   

 

 

   

 

 

 
     For the three months ended June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Net Loss

     (169,742     (266,741     (41,313

Share-based compensation

     19,971       48,518       7,515  
  

 

 

   

 

 

   

 

 

 

Adjusted net loss

     (149,771     (218,223     (33,798
  

 

 

   

 

 

   

 

 

 

 

13


17 EDUCATION & TECHNOLOGY GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of RMB and USD, except for share and per ADS data, or otherwise noted)

 

     For the six months ended June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Net revenues

     500,451       1,145,138       177,359  

Cost of revenues (Note 1)

     (180,187     (435,628     (67,470
  

 

 

   

 

 

   

 

 

 

Gross profit

     320,264       709,510       109,889  
  

 

 

   

 

 

   

 

 

 

Operating expenses (Note 1)

      

Sales and marketing expenses

     (355,301     (920,258     (142,530

Research and development expenses

     (269,086     (439,462     (68,064

General and administrative expenses

     (93,960     (239,218     (37,050

Impairment for property and equipment and right-of-use assets

     —         (56,882     (8,810
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     (718,347     (1,655,820     (256,454
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (398,083     (946,310     (146,565
  

 

 

   

 

 

   

 

 

 

Interest income

     4,699       15,089       2,337  

Interest expense

     (2,726     —         —    

Foreign currency exchange gain

     332       1,861       288  

Other income, net

     1,829       2,932       454  
  

 

 

   

 

 

   

 

 

 

Loss before provision for income tax

     (393,949     (926,428     (143,486
  

 

 

   

 

 

   

 

 

 

Income tax expenses

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Net loss

     (393,949     (926,428     (143,486
  

 

 

   

 

 

   

 

 

 

Accretion of convertible redeemable preferred shares

     (572,201     —         —    
  

 

 

   

 

 

   

 

 

 

Net loss available to ordinary shareholders of 17

     (966,150     (926,428     (143,486
  

 

 

   

 

 

   

 

 

 

Education & Technology Group Inc.

      
  

 

 

   

 

 

   

 

 

 

Net loss per ordinary share

      

Basic and diluted

     (16.57     (1.92     (0.30
  

 

 

   

 

 

   

 

 

 

Net loss per ADS (Note 2)

      

Basic and diluted

     (41.43     (4.80     (0.75
  

 

 

   

 

 

   

 

 

 

Weighted average shares used in calculating net loss per ordinary share

      

Basic and diluted

     58,293,721       482,100,675       482,100,675  
  

 

 

   

 

 

   

 

 

 

Note 1: Share-based compensation expenses were included in the cost and operating expenses as follows:

 

     For the six months ended June 30,  
     2020      2021      2021  
     RMB      RMB      USD  

Share-based compensation expenses:

        

Sales and marketing expenses

     7,171        11,594        1,796  

Research and development expenses

     26,537        23,249        3,601  

General and administrative expenses

     31,731        84,524        13,091  
  

 

 

    

 

 

    

 

 

 

Total

     65,439        119,367        18,488  
  

 

 

    

 

 

    

 

 

 

Note 2: Two ADSs represent five Class A ordinary shares.

 

14


17 EDUCATION & TECHNOLOGY GROUP INC.

Reconciliations of non-GAAP measures to the most comparable GAAP measures

(In thousands of RMB and USD, except for share, per share and per ADS data)

 

     For the six months ended June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Net revenues of online K-12 tutoring services

     463,224       1,125,039       174,246  
  

 

 

   

 

 

   

 

 

 

Add: VAT and surcharges

     27,793       111,287       17,236  

Add: ending deferred revenue

     331,661       685,599       106,186  

Add: ending refund liability

     16,366       38,860       6,019  

Less: beginning deferred revenue

     218,919       564,911       87,494  

Less: beginning refund liability

     5,907       22,869       3,542  
  

 

 

   

 

 

   

 

 

 

Gross billings of online K-12 tutoring services (non-GAAP)

     614,218       1,373,005       212,651  
  

 

 

   

 

 

   

 

 

 
     For the six months ended June 30,  
     2020     2021     2021  
     RMB     RMB     USD  

Net Loss

     (393,949     (926,428     (143,486

Share-based compensation

     65,439       119,367       18,488  
  

 

 

   

 

 

   

 

 

 

Adjusted net loss

     (328,510     (807,061     (124,998
  

 

 

   

 

 

   

 

 

 

 

15