Three hundred and sixty lines, each of which has a "difficult scripture". How to find and solve the current problems of the industry, and how to find the direction of the future transformation and development of the industry, is the most concerned issue for every practitioner.
In the education and training industry after the double reduction, the answers to these questions all point to a key word: digital education.
At the 18th China Consumer Economy High-level Forum on April 12, Consumer Daily, Worthbuy Technology and other research companies jointly released the "Consumer Market Industry Public Opinion Hot Spots from 2023 to the First Quarter of 2024". Among them, three of the hot spots of public opinion in the education and training industry are related to digital education.
From the perspective of the development of digital education itself, the mainstream forms of online disks and online courses in the current market focus more on adult examinations such as research examinations, public examinations, and certificate examinations. The digital education market for K-9 and K-12 age groups is still in its infancy.
Recently, Jinxin Technology Holding Company (hereinafter referred to as "Nanobox"), the substantive holding company of Shanghai Jinxin Network Technology Co., Ltd., China's largest K9 digital education content service provider, has updated its prospectus with the Securities and Exchange Commission (SEC) and intends to be listed on the NASDAQ under the stock code NAMI.
According to the prospectus, the registered users of nanoboxes in 2023 will exceed 39 million, the annual revenue in 2023 will be 380 million yuan, a year-on-year increase of 61%, and at the same time, the operating profit will be 80.55 million yuan, a year-on-year increase of 82%, accelerating into a profitable period.
The dazzling performance data has also attracted the market's attention to nanoboxes and digital education, how does nanoboxes achieve evolutionary growth, and what is the development pattern of the digital education industry in the future?
Understanding these key questions can help us make further judgments about the value of investment in the digital education industry.
In 2023, the revenue will increase by more than 100 million yuan, and the "moat" of the nanobox is time and copyright
In terms of financial performance, the high growth rate of nanoboxes and stable profitability are the most prominent performances. According to the data, the revenue in 2022 and 2023 will be 236 million yuan and 380 million yuan respectively, the gross profit will be 97.26 million yuan and 160 million yuan respectively, the gross profit margin will be 41.1% and 42.1% respectively, the operating profit will be 43.77 million yuan and 80.05 million yuan respectively, and the net profit will be 55.08 million yuan and 83.49 million yuan respectively.
From a business perspective, Namibox mainly distributes digital education content through three channels: (1) B2C: Namibox, the flagship learning application of Namibox, provides digital educational content to students or parents and collects subscription fees, (2) B2B2C: Namibox cooperates with telecom and broadcasting operators to distribute content through TV and radio, and (3) B2B: Namibox provides content services to customers such as governments, schools, and third-party equipment vendors.
Taking the 2c side as an example, as of December 31, 2023, the Namibox app of Namibox has been downloaded more than 79 million times, and the number of registered users has exceeded 39 million. Paying subscribers increased from 1.39 million in 2021 to 1.42 million in 2022 and further to 1.46 million in 2023. The steady growth of paying users is the superficial reason for the company's revenue growth, and the deeper source of growth is still from the nanobox product itself.
Namibox has developed from a humble private self-made website in the early days to a mature APP product that later moved towards corporate operation. Parents can directly realize the reading function of textbooks on the mobile terminal, and the cost of downloading the APP for free is much lower than the cost of tutors and learning machines, so that many children from families who are not wealthy can enjoy convenient Internet-based learning.
In the words of founder and CEO Xu Jin, the essence of the early nanobox was a repeater, but because the product met the needs of the times, the nanobox entered many users at an appropriate time and with an appropriate communication mode.
In addition, the copyright issue is also a "hard bone" gnawed down in the development process of nanoboxes. As a start-up, it is a very difficult process to negotiate digital rights licensing with a large publishing house. Difficult, still persevering. Because not legalizing copyright is tantamount to planting a "landmine" for your own products. In the end, it took Xu Jin 18 months to obtain the digital rights of 26 domestic textbook publishers.
The appropriate product entry window and legal and compliant copyrights have put nanoboxes on the fast track of healthy growth. According to Frost & Sullivan, Nanobox is already the largest digital textbook platform for K-9 students in China and a leading provider of digital educational content by revenue.
The top online education company "winner takes all", the first and second place is half a step ahead, which may have huge reverse pressure on the followers behind. The 79 million downloads of nanobox have formed a leading advantage in the industry, and it has an active advantage in the licensing agreement with the publishing house, and it is difficult for the latecomer to reach the user scale of the cooperation agreement signed between the nanobox and the publishing house, and it is difficult to make a commitment to the publishing house to a certain amount. The two-pronged approach has jointly achieved the barrier of nanoboxes.
The K-9 track entered a new blue ocean, and the nanobox took advantage of the momentum
Under the scale effect, it will also bring more opportunities and growth space for it. At the same time, with the end of a new round of elimination, the online education K-9 track is entering a new blue ocean market. According to Frost & Sullivan, the revenue of China's K-9 digital education content service market grew from 3.5 billion yuan in 2018 to 9.6 billion yuan in 2022, with a CAGR of 29.1%. The market is expected to continue to rise, with revenue reaching $23.7 billion in 2027, a CAGR of 19.8% from 2022.
From a policy perspective, in 2017 and 2022, relevant policies for online education platforms and digital textbooks were introduced respectively, vigorously promoting the construction of online education platforms, and formulating national standards for digital textbooks. On January 30, 2024, the World Conference on Digital Education was held in Shanghai, once again emphasizing the strengthening of digital education development and creating a favorable environment for the vigorous development of the digital education market.
From the perspective of demographic composition, the "alpha generation" group who grew up in the mobile Internet era has long been accustomed to digital education tools and resources. They are becoming the majority of the K-9 school-age population. Parents born in the 80s and 90s tend to be more receptive to digital education content services.
From a technical point of view, the rapid popularization of mobile Internet and 5G networks has improved the accessibility and efficiency of online education, and made parents, students, teachers and other stakeholders truly feel the advantages of digital learning. AR/VR interactive tools, as well as cutting-edge technologies such as artificial intelligence, automatic speech recognition, and natural language processing, make the learning process more personalized and interactive.
Together, these factors are contributing to the growth of the K-9 digital education market. Parents who cannot afford the high cost of tutoring have shifted their children's tutoring needs online, meeting their children's basic learning needs through digital reading textbooks, then using digital media reading and digital teaching aids to meet their children's knowledge expansion needs, and finally returning to live classrooms to let more professional teachers answer students' doubts.
By closing the commercial "closed loop" of the whole process of its own products, the nanobox meets the growing market demand and provides the cost performance brought by the Internet. In terms of price, compared with offline competing classes that often cost hundreds or even thousands, the price of the nanobox is set at 25 yuan per class, which is obviously more attractive to low- and middle-income families. With the advancement of technology, the advantage of "learning atmosphere" in offline classes, which was once a source of pride, is gradually disappearing.
AIGC+AR/VR technology supports to create primary and secondary school students' own "metaverse"
By adding social elements to the product and launching functions such as communities and quizzes, Nano Box allows students to actively communicate with their classmates on the platform when reading and learning, creating a "metaverse" of online textbook verticals, transforming the boring learning process into a journey of common progress, common growth and common progress.
On a technical level, Nanobox has also developed a proprietary content generation engine, DaVinci, which enables the platform to efficiently and continuously design and generate new content in different formats. At the same time, with the popularization of metaverse infrastructure such as vision pro, in the future, with the support of AR and VR technologies, the practical application scenarios of situational teaching and gamification teaching will be closer to reality. The embodied interaction and immersive experience brought by the educational metaverse can bring higher user stickiness and more paying users to the nanobox.
On the market side, a global and lower-tier market vision is also essential, and the demand for digital education content for K9 age groups in lower-tier cities and the global market is also waiting to be explored. In the prospectus, Nano Box also stated that it will expand its footprint to third-tier cities and below while increasing the penetration rate of first-tier cities through online and offline marketing, and will promote its products to overseas markets and localize content through cooperation with overseas distributors in the future.
In the final analysis, the emergence of nanoboxes is to solve children's tutoring problems at a more affordable price and higher quality. Through the digital integration of textbooks and the supplementation of extracurricular content, the nanobox not only improves the learning efficiency of students, but also reduces the cost of parents to obtain educational resources.
epilogue
Teacher output and student input are two sides of the same coin. In this old mode of teaching, both teachers and students are connected to the classroom through a lectern. The significance of digital education is to break the boundaries of this kind of classroom, so that students can take the initiative to absorb the knowledge they need and achieve true "boundless learning". In the application of digital education, technology is no longer superior, but really helps every child who is serious about learning.
From blackboard chalk to digital textbooks and teaching aids, to AR/VR, the main scene of education has shifted from focusing in schools to home-school linkage, complementing each other. But the essence of the industry is still to provide knowledge for students, cost-effective for parents, and solutions for schools. In the digital education industry, companies that connect the needs of students, parents, and schools through products and services are more worthy of attention.
Therefore, under the premise of healthy financial reports, how to continue to explore the needs of students and parents, do a good job in updating and iterating products, and improve the user experience should be the next issues that nanoboxes should pay more attention to.
Source: U.S. Stock Research Agency