If you want to choose the worst industry in 2021, the education and training industry must be on the list. A "double subtraction" hammer, I don't know how many people's entrepreneurial dreams have been smashed.
Nowadays, the aftershock of "double subtraction" is still there, and New Oriental, which "starts from scratch", has begun to explore live e-commerce after ushering in the first loss of listing.
A good future of survival with a broken arm, after the closure of the K9 business, the net loss in Q3 of fiscal 2022 alone is nearly 100 million, and it is still worrying about the future road.
But at this moment, there was good news in the industry, and the high road that was also struggling on the line of life and death actually made money.
On March 8, Gaotu released its unaudited financial results for fiscal 2021 Q4 and the full year. According to the financial report, the net profit of Gaotu Q4 was 286 million yuan, and the profit margin reached 25.5%, a record high.
The figure originates from the high-way financial report, and is invaded and deleted (the same below)
In the period after the double reduction, what did this education and training giant, who looked the most miserable, do? Why is it possible to achieve profitability when the business is greatly affected?
One of the most educational people in the industry
If you know The founder of Gaotu, Chen Xiangdong, it is not difficult to understand why Gaotu was able to reverse the decline in such a short period of time.
Before starting his business, Chen Xiangdong was not ignorant of online education. Prior to this, his most well-known identity was the "number two person" of New Oriental.
In 1999, at the age of 28, Chen Xiangdong officially joined New Oriental and became a GRE logic teacher.
In the following 14 years, Chen Xiangdong upgraded all the way to "fighting monsters", from ordinary teachers to Wuhan branch principals, to vice presidents of the group, and finally to the executive president, becoming "one of the most educated people in the industry".
In 2014, at the time of the rise of the domestic online education boom, Chen Xiangdong, 43, realized that a new entrepreneurial outlet was coming, "Why not change education through technology and make education better?" ”
Once the idea of starting a business began to germinate, Chen Xiangdong felt that it was time to give up tens of millions of annual salaries to realize his dream.
The graph originates from the network
Therefore, he found Zhang Huaiting, one of the founders of Baidu's "Fengchao", Li Gangjiang, director of Baidu's big data department, Su Wei, founder of Mingshi.com, and others to create an O2O teacher learning service platform - learn from whom (the predecessor of Gaotu).
Worthy of being the most educated person in the industry, Chen Xiangdong's founding team has effectively realized the perfect combination of education + Internet genes, and also laid the foundation for rapid growth in the future.
After only one year of going online, there are nearly 300,000 teachers and 30,000 institutions on the platform. Its business covers more than 300 cities across the country, and has set up branches and agents in 35 cities such as Beijing, Wuhan and Chengdu.
However, tomorrow and accidents, no one knows which will come first. In 2017, the education O2O industry like a fiery cooking oil burst in the bubble of collective singing. After stepping on the pit, Chen Xiangdong became more cautious, believing that who to learn from should return to the essence of education.
After a long period of exploration and adjustment, in 2018, he completely transformed into a B2C online education institution, adopting the model of "famous teacher teaching + double teacher tutoring". A dual-teacher system, where a class is staffed with 1 teacher and multiple counselors.
In 2019, he who only raised the A round of financing was successfully listed on the New York Stock Exchange, which can be called a new miracle in the education and training industry. And unlike many online education "bloody listings", who to learn from is a rare company that can really scale and make profits.
It is worth mentioning that as of the second quarter of 2020, who to learn with has set a myth of achieving 9 consecutive quarters of profitability.
Chen set sail to the east for the third time
In April 2021, Chen Xiangdong, who was vaguely aware of the change in the direction of the policy, announced that he would change his name to Gaotu Group with whom he would learn, hoping that the company would "go high from now on".
However, before Chen Xiangdong completed the business adjustment, on July 24, the "double reduction" policy officially landed.
Several regulations, such as stipulating that existing discipline-based training institutions are uniformly registered as non-profit institutions, and off-campus training institutions are not allowed to occupy national statutory holidays, rest days, and winter and summer vacations to organize discipline-based training, etc., directly blocking the way out of education and training institutions.
Coincidentally, on August 3, the leading group of the Education Work of the Beijing Municipal Party Committee held a meeting to implement the central "double reduction" working document and the spirit of the meeting, and clearly proposed to grasp the "three limits" - limiting the number of institutions, limiting training time, and limiting the price of fees.
This is tantamount to a catastrophe for Gaotu, which is mainly based on K12 business.
For a long time, under the leadership of Chen Xiangdong's unique teaching philosophy, the teaching results of K12 with whom to learn are remarkable in the industry, especially the total number of outstanding students makes it difficult for many online education brands to match.
But under this most stringent supervision, it seems that the golden signboard with whom to learn has also been abandoned by capital. Gaotu shares fell off a cliff, falling from an all-time high of $149 per share on January 27, 2021, to $1.70 today, a drop of 98.86%.
On July 30, 2021, Chen Xiangdong sent an internal letter to employees late at night, pointing out that the company was facing the pressure of life and death. After five consecutive apologies, Gaotu began a massive layoff involving tens of thousands of people.
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At the same time, in order to keep the company alive and save more book capital flows, Gaotu announced that it would close 13 centers across the country, leaving only three tutoring centers in Zhengzhou, Wuhan and Chengdu.
In addition to layoffs, Gaotu has also made major changes in its business, taking the lead in completely stopping the release of information flow, and completely stopping online training for children aged 3-6, quickly divesting the discipline-based training business, and gradually shifting the focus of its business to professional education, vocational education and digital products.
The business transformation, personnel and organizational adjustments made by Gaotu in the third quarter have proved to have achieved remarkable results in a short period of time. In the fourth quarter, Gaotu achieved profitability and positive operating cash flow, achieving revenue of 1,274.3 million yuan and cash income of 1,006.5 million yuan.
The fundamental reason why Gaotu can achieve profitability is because it has always adopted a large class teaching model that is mainly online.
epilogue
It is undeniable that although Gaotu achieved profitability in the fourth quarter of 2021, it still lost 3.1 billion yuan for the whole year, an increase of 122% year-on-year. This means that if Gaotu wants to achieve full profitability, there is still a big business gap that cannot be taken lightly.
The figure originates from Gao Tu Guanwei
And after the "double reduction", the education and training giants that still have spare strength have focused on the adult education sector after divesting the K9 business. Coupled with the behavior education that was originally cultivated in the adult education track, the entire adult education track is more crowded, which can be described as a group of wolves.
Therefore, K12 educational institutions are transformed to survive, and adult education is not necessarily its "safe haven".
According to a survey, by 2023, the scale of China's adult education industry is expected to reach 148.9 billion yuan, and the potential users can reach 680 million people, which is about 3.4 times that of the K12 education age population. It can be seen that the imagination space of the adult education track is larger than that of K12, and the benefits are more considerable.
Behind the 680 million people is workplace anxiety, which also makes the domestic adult education demand show a blowout trend. Under pressure, all kinds of professional certificates have become a passport for some professionals to "go to the next level". Anxious adults also seem to be more willing to "spend money on appreciation" for themselves than "chicken babies".
For Gaotu, the transformation of adult education, in addition to a larger market space, also has a natural convergence advantage: the previous service object was children, but it was the parents who paid the bill; now the consumer is the payer, the communication is easier, and the consumer decision-making chain is shorter.
However, it should be noted that adult education has never been the best solution for the education and training industry. Education products also have low frequency, high prices, heavy decision-making and other defects, and the decisive factor for whether education and training institutions can truly survive in the market in the end lies in whether the business model runs through.
Therefore, under the bleak future of K12 education, there is still a long way to go in how Gaotu should lay out and transform adult education and achieve curve overtaking.
statement
The cover is from Gaotu Official Micro, the article information comes from the network, and this article is mainly used for communication and sharing. If there is infringement, please contact to delete, thank you for understanding.