Catch the last train to go public, Head Education (NYSE:ZME) or become the last Chinese local online education company to IPO.
Since going public in the United States, the fate of the head education has been uncertain. On July 30, the Internet reported that the head of education was laying off employees, and the proportion of layoffs was as high as 70%. There are also rumors that "(relevant departments) have looked for Tencent for several rounds and let Tencent take over (manage) the head." ”
In this regard, Zhang Yi, founder and CEO of Zhang Ye, said in the circle of friends, "(Zhangmen Education) the existing business will guide better, healthy and orderly development according to policies, while increasing investment in quality education, and have to send off some business partners, and also seek more talents in quality education to join in order to meet the expectations of the society for us." ”
Bedow Finance found that Zhang Yi did not deny the layoffs. Zhang Yi said that the layoffs are due to the need for more quality education talents to transform, rather than a funding problem. Zhang Yi said, "There are even rumors that the head of the layoffs is because of financial problems."
The implication is that there is no shortage of money in charge of education. According to its prospectus with the U.S. Securities and Exchange Commission (SEC), as of March 21, 2021, it held approximately $457 million in cash and cash equivalents. During the same period, Paige Education had $864 million in debt.
From the book point of view, the cash of the head education is difficult to cover the debt. However, there was no problem with the cash flow of the head education. According to the prospectus, the enrollment rate of paid students under The head of education 1 to 1 in 2020 was 544,800, an increase of 43.2% over the 380,500 in 2019.
It is understood that the head of education was listed on the New York Stock Exchange on June 8, 2021. In this listing in the United States, the IPO of Head Education was priced at $11.50 per ADS, and the number of shares issued was 3.623 million shares. According to this calculation, the amount raised by The Head Education is US$41.7 million (excluding over-allotment).
In terms of finance, in 2019 and 2020, the revenue of The Head Education was 2.669 billion yuan and 4.018 billion yuan respectively, of which 2020 increased by 50.6% compared with 2019; the corresponding net losses were 1.504 billion yuan and 1.012 billion yuan, respectively, with a total loss of 2.516 billion yuan in the past two years.
The data shows that the scale of losses in the head education is intensifying. Among them, the loss in the first quarter of 2021 expanded by 244 times year-on-year to 497 million yuan. It is worth noting that the size of the first quarter of 2021 is equivalent to half of its annual loss in 2020.
Bedo Finance learned from the pulse of the workplace real-name authentication social platform that the head of education has already started layoffs in the middle of 2021. Some users broke the news that the product "Xiaohu AI Class" of the AI Division under the head of education laid off more than 200 employees, while the total number of employees of the head education was only about 1,000 people.
At the same time as laying off employees, the head of education has not stopped recruiting new employees. It is understood that for the layoffs of the head education, Zhang Yi, the head of the head education, also said that he was "seeking more talents in quality education to join in order to meet the expectations of the society for the company."
In fact, in addition to the layoff adjustment of the head education, Good Future, Gaotu Group (who to learn from) and so on have also opened layoffs. Among them, Zhang Bangxin, CEO of Good Future, said that the business without demand will definitely be shut down, and the employees in the corresponding business can transfer jobs internally, and those who cannot be transferred will be compensated.
A Gaotu Group HR told Bedo Finance that its group was not affected in any way. The HR said that it belongs to the adult vocational education sector and (related policies) has not been affected. According to the late Late Post news, Chen Xiangdong, founder and CEO of Gaotu Group, held a meeting and will shut down 13 centers, leaving only 3.
On July 30, Chen Xiangdong also issued an internal letter saying, "I am very, very sorry that we had to make such a difficult decision. Very, very sad that many of our friends will have to leave. Very, very sad, we have to give up so many emotions that have to be given up. ”
In response to the layoffs, the head of education responded that the main optimization is the low-kindergarten project team, because these businesses do not meet the requirements of the national policy, and other product teams will adjust the compliance such as teaching time in accordance with the national policy requirements, and also carry out normal teaching.
The head of education also said that its teaching teachers, class teachers, curriculum consultants and other positions are in normal operation. The overall operating situation is stable and the financial position is stable. Zhang Yi also said that the head of education is a listed company, the financial reports are open, and the funds are abundant and healthy.
Bedo Finance has learned that since its listing on June 8, 2021, the stock price of Zhongmen Education has fallen and fallen. As of the close of the U.S. stock market on July 30, its share price closed at $5.30 per share, down 53.91% from the IPO issue price of $11.50, with a total market capitalization of $836 million.
During this period, the Chief Financial Officer (CFO) of Heman Education also issued an announcement on July 9, 2021, saying that Ricky Kwok Yin Ng had resigned as CFO and director of CFA. After his resignation, Wu Guoxian was appointed vice president of the Liberal Education business.
It is worth noting that the F-round investors of the head education (including SoftBank, Yuansheng Capital, CMC Capital, etc.) are in a state of loss on the books. In addition, SoftBank and Yuansheng Capital are also cornerstone investors in the head of education, and intend to subscribe for no more than $15 million in ADS at the time of the IPO, which is also a heavy loss.
In addition, there are many teachers in charge of education who are not licensed. As of March 31, 2021, the company had more than 45,000 teachers, including approximately 25,000 full-time teachers and approximately 20,000 (11,995) part-time teachers, including those provided by third-party service providers.
According to the information disclosed in the prospectus of The Head Education, as of March 31, 2021, 69.6% of the company's full-time employees of K-12 subject teachers have obtained teacher qualification certificates, and 2.3% of full-time K-12 teachers have passed the teacher qualification certificate examination.
This also means that as of March 31, 2021, about 30.4% of the full-time teachers of the head education have not yet held a teacher qualification certificate. Based on the number of 25,000 full-time teachers, about 7,600 full-time teachers in charge of education are in a "naked" state.