Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2020 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Registrant Name | China Online Education Group |
Entity File Number | 001-37790 |
Entity Address, Address Line One | 6th Floor Deshi Building North, |
Entity Address, Address Line Two | Shangdi Street, Haidian District |
Entity Address, City or Town | Beijing |
Entity Address, Postal Zip Code | 100085 |
Entity Address, Country | CN |
Entity Incorporation, State or Country Code | E9 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
Entity Shell Company | false |
Entity Central Index Key | 0001659494 |
Current Fiscal Year End Date | --12-31 |
Document Accounting Standard | U.S. GAAP |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
ICFR Auditor Attestation Flag | false |
ADS | |
Title of 12(b) Security | American Depositary Shares, each representing fifteen Class A ordinary shares, par value US$0.0001 per share |
Security Exchange Name | NYSE |
Trading Symbol | COE |
Entity Common Stock, Shares Outstanding | 2,092,500 |
Class A ordinary shares | |
Title of 12(b) Security | Class A ordinary shares, par value US$0.0001 per share* |
Security Exchange Name | NYSE |
No Trading Symbol Flag | true |
Entity Common Stock, Shares Outstanding | 193,953,398 |
Class B ordinary shares | |
Entity Common Stock, Shares Outstanding | 129,687,166 |
Business Contact | |
Contact Personnel Name | Min Xu |
Entity Address, Address Line One | 6th Floor Deshi Building North, |
Entity Address, Address Line Two | Shangdi Street, Haidian District |
Entity Address, City or Town | Beijing |
Contact Personnel Email Address | ir@51talk.com |
Entity Address, Postal Zip Code | 100085 |
Entity Address, Country | CN |
City Area Code | 86 |
Local Phone Number | 10-8342 6262 |
Ordinary Shares | |
Entity Common Stock, Shares Outstanding | 323,640,564 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 326,647 | $ 50,061 | ¥ 342,951 |
Time deposits | 477,408 | 73,166 | 144,093 |
Short-term investments | 509,636 | 78,105 | 452,936 |
Inventory | 1,935 | 297 | 308 |
Prepaid expenses and other current assets | 302,057 | 46,292 | 250,215 |
Total current assets | 1,617,683 | 247,921 | 1,190,503 |
Non-current assets: | |||
Property and equipment, net | 21,175 | 3,245 | 20,336 |
Intangible assets, net | 20,302 | 3,111 | 9,918 |
Goodwill | 4,223 | 647 | 4,223 |
Right-of-use assets | 98,001 | 15,019 | 56,638 |
Time deposits | 414,000 | 63,448 | 113,415 |
Deferred tax assets | 10,268 | 1,574 | 337 |
Other non-current assets | 23,896 | 3,662 | 6,447 |
Total non-current assets | 591,865 | 90,706 | 211,314 |
Total assets | 2,209,548 | 338,627 | 1,401,817 |
Current liabilities: | |||
Short-term loan | 16,578 | ||
Advances from students (all from consolidated variable interest entities ("VIEs") without recourse, Note 1) | 2,718,776 | 416,671 | 2,181,808 |
Accrued expenses and other current liabilities (including from consolidated VIEs without recourse to the Company of RMB86,043 and RMB122,251 as of December 31, 2019 and 2020, respectively, Note 1) | 237,101 | 36,337 | 166,955 |
Lease liabilities | 42,949 | 6,582 | 31,550 |
Taxes payable (including from consolidated VIEs without recourse to the Company of RMB14,123 and RMB15,693 as of December 31, 2019 and 2020, respectively, Note 1) | 19,288 | 2,956 | 21,661 |
Total current liabilities | 3,018,114 | 462,546 | 2,418,552 |
Non-current liabilities: | |||
Advances from students (all from consolidated variable interest entities ("VIEs") without recourse, Note 1) | 2,270 | 348 | 4,783 |
Lease liabilities | 53,594 | 8,214 | 23,545 |
Other non-current liabilities (including from consolidated VIEs without recourse to the Company of RMB247 and RMB244 as of December 31, 2019 and 2020, respectively, Note 1) | 2,508 | 384 | 1,595 |
Total non-current liabilities | 58,372 | 8,946 | 29,923 |
Total liabilities | 3,076,486 | 471,492 | 2,448,475 |
Commitments and contingencies | |||
Shareholders' deficit: | |||
Ordinary shares | 213 | 33 | 205 |
Treasury stock | (23,109) | (3,542) | (6,011) |
Additional paid-in capital | 1,199,014 | 183,757 | 1,128,079 |
Accumulated other comprehensive income | 8,884 | 1,361 | 29,971 |
Accumulated deficit | (2,051,940) | (314,474) | (2,198,902) |
Total shareholders' deficit | (866,938) | (132,865) | (1,046,658) |
Total liabilities and shareholders' deficit | ¥ 2,209,548 | $ 338,627 | ¥ 1,401,817 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares |
Accrued expenses and other current liabilities | ¥ 237,101 | $ 36,337 | ¥ 166,955 |
Taxes payable | 19,288 | 2,956 | 21,661 |
Other non-current liabilities | ¥ 2,508 | $ 384 | ¥ 1,595 |
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Ordinary shares, authorized (in shares) | 1,500,000,000 | 1,500,000,000 | 1,500,000,000 |
Ordinary shares, issued (in shares) | 325,733,064 | 325,733,064 | 313,857,894 |
Ordinary shares, outstanding (in shares) | 323,640,564 | 323,640,564 | 312,051,174 |
VIEs and VIES' subsidiaries | |||
Accrued expenses and other current liabilities | ¥ | ¥ 122,551 | ¥ 86,043 | |
Taxes payable | ¥ | 15,693 | 14,123 | |
Other non-current liabilities | ¥ | ¥ 244 | ¥ 247 | |
Class A ordinary shares | |||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Ordinary shares, authorized (in shares) | 1,000,000,000 | 1,000,000,000 | |
Ordinary shares, issued (in shares) | 196,045,898 | 196,045,898 | 90,744,233 |
Ordinary shares, outstanding (in shares) | 193,953,398 | 193,953,398 | 88,937,513 |
Class B ordinary shares | |||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Ordinary shares, authorized (in shares) | 350,000,000 | 350,000,000 | |
Ordinary shares, issued (in shares) | 129,687,166 | 129,687,166 | 223,113,661 |
Ordinary shares, outstanding (in shares) | 129,687,166 | 129,687,166 | 223,113,661 |
Ordinary shares to be designated | |||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||
Ordinary shares, authorized (in shares) | 150,000,000 | 150,000,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | |
Net revenues | ¥ 2,054,095 | $ 314,804 | ¥ 1,478,493 | ¥ 1,145,517 |
Cost of revenues | (580,417) | (88,953) | (439,923) | (410,908) |
Gross profit | 1,473,678 | 225,851 | 1,038,570 | 734,609 |
Operating expenses: | ||||
Sales and marketing expenses | (1,035,620) | (158,716) | (792,591) | (731,233) |
Product development expenses | (162,829) | (24,955) | (157,505) | (185,000) |
General and administrative expenses | (214,224) | (32,831) | (196,029) | (223,057) |
Total operating expenses | (1,412,673) | (216,502) | (1,146,125) | (1,139,290) |
Other income | 43,414 | 6,653 | ||
Income/(loss) from operations | 104,419 | 16,002 | (107,555) | (404,681) |
Impairment loss | ¥ | (7,364) | |||
Interest income | 38,508 | 5,902 | 17,654 | 9,167 |
Interest expenses and other expense, net | (66) | (10) | (9,451) | (9,936) |
Income/(loss) before income tax expenses | 142,861 | 21,894 | (99,352) | (412,814) |
Income tax benefits/(expenses) | 4,101 | 629 | (5,068) | (3,880) |
Net income/(loss), all attributable to the Company's ordinary shareholders | ¥ 146,962 | $ 22,523 | ¥ (104,420) | ¥ (416,694) |
Weighted average number of ordinary shares used in computing basic income/(loss) per share | 319,553,690 | 319,553,690 | 308,364,918 | 304,542,400 |
Weighted average number of ordinary shares used in computing diluted income/(loss) per share | 341,503,118 | 341,503,118 | 308,364,918 | 304,542,400 |
Net income/(loss) per share attributable to ordinary shareholders-basic | (per share) | ¥ 0.46 | $ 0.07 | ¥ (0.34) | ¥ (1.37) |
Net income/(loss) per share attributable to ordinary shareholders-diluted | (per share) | ¥ 0.43 | $ 0.07 | ¥ (0.34) | ¥ (1.37) |
Comprehensive income/(loss): | ||||
Net income/(loss) | ¥ 146,962 | $ 22,523 | ¥ (104,420) | ¥ (416,694) |
Other comprehensive income/(loss) | ||||
Foreign currency translation adjustments | (21,087) | (3,232) | 5,356 | 16,939 |
Total comprehensive income/(loss) | ¥ 125,875 | $ 19,291 | ¥ (99,064) | ¥ (399,755) |
ADS | ||||
Operating expenses: | ||||
Net income/(loss) per share attributable to ordinary shareholders-basic | (per share) | ¥ 6.90 | $ 1.06 | ¥ (5.08) | ¥ (20.55) |
Net income/(loss) per share attributable to ordinary shareholders-diluted | (per share) | ¥ 6.46 | $ 0.99 | ¥ (5.08) | ¥ (20.55) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT ¥ in Thousands, $ in Thousands | Ordinary SharesCNY (¥)shares | Treasury StockCNY (¥)shares | Additional Paid-in CapitalCNY (¥) | Accumulated Other Comprehensive Income/(Loss)CNY (¥) | Accumulated DeficitEffect of changes in accounting principlesCNY (¥) | Accumulated DeficitCNY (¥) | Effect of changes in accounting principlesCNY (¥) | CNY (¥) | USD ($) |
Increase (Decrease) in Stockholders' Equity | |||||||||
Effect of changes in accounting principles related to revenue recognition | ASU 2014-09 | ¥ 75,999 | ¥ 75,999 | |||||||
Beginning balance at Dec. 31, 2017 | ¥ 197 | ¥ 1,077,523 | ¥ 7,676 | ¥ (1,753,787) | ¥ (668,391) | ||||
Beginning balance (in shares) at Dec. 31, 2017 | shares | 302,714,259 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Exercise of stock options | ¥ 1 | 1,611 | 1,612 | ||||||
Exercise of stock options (in shares) | shares | 2,070,915 | ||||||||
Settlement of RSU | ¥ 1 | (1) | |||||||
Settlement of RSU (in shares) | shares | 1,132,350 | ||||||||
Share-based compensation | 27,886 | 27,886 | |||||||
Net income/(loss) | (416,694) | (416,694) | |||||||
Foreign currency translation adjustments | 16,939 | 16,939 | |||||||
Ending balance at Dec. 31, 2018 | ¥ 199 | 1,107,019 | 24,615 | (2,094,482) | (962,649) | ||||
Ending balance (in shares) at Dec. 31, 2018 | shares | 305,917,524 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Exercise of stock options | ¥ 3 | 4,331 | 4,334 | ||||||
Exercise of stock options (in shares) | shares | 5,001,660 | ||||||||
Settlement of RSU | ¥ 3 | (3) | |||||||
Settlement of RSU (in shares) | shares | 2,938,710 | ||||||||
Share-based compensation | 16,732 | 16,732 | |||||||
Share repurchase program | ¥ (6,011) | (6,011) | |||||||
Share repurchase program (in shares) | shares | 1,806,720 | ||||||||
Net income/(loss) | (104,420) | (104,420) | |||||||
Foreign currency translation adjustments | 5,356 | 5,356 | |||||||
Ending balance at Dec. 31, 2019 | ¥ 205 | ¥ (6,011) | 1,128,079 | 29,971 | (2,198,902) | (1,046,658) | |||
Ending balance (in shares) at Dec. 31, 2019 | shares | 313,857,894 | 1,806,720 | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Exercise of stock options | ¥ 4 | ¥ 0 | 10,326 | 0 | 0 | 10,330 | |||
Exercise of stock options (in shares) | shares | 5,103,015 | 0 | |||||||
Settlement of RSU by new issuance | ¥ 1 | ¥ 0 | (1) | 0 | 0 | 0 | |||
Settlement Of RSU by new issuance (in shares) | shares | 1,865,055 | 0 | |||||||
Settlement of RSUs or stock options by reissuance of treasury stocks | ¥ 6,018 | (6,018) | |||||||
Settlement of RSUs or stock options by reissuance of treasury stocks (in shares) | shares | (1,808,220) | ||||||||
Share-based compensation | 26,734 | 26,734 | |||||||
Share repurchase program | ¥ (23,116) | (23,116) | |||||||
Share repurchase program (in shares) | shares | 2,094,000 | ||||||||
Follow-on public offering | ¥ 3 | 39,894 | 39,897 | ||||||
Follow-on public offering (in shares) | shares | 4,907,100 | ||||||||
Net income/(loss) | 146,962 | 146,962 | $ 22,523 | ||||||
Foreign currency translation adjustments | (21,087) | (21,087) | (3,232) | ||||||
Ending balance at Dec. 31, 2020 | ¥ 213 | ¥ (23,109) | ¥ 1,199,014 | ¥ 8,884 | ¥ (2,051,940) | ¥ (866,938) | $ (132,865) | ||
Ending balance (in shares) at Dec. 31, 2020 | shares | 325,733,064 | 2,092,500 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Cash flows from operating activities: | ||||
Net income/(loss) | ¥ 146,962 | $ 22,523 | ¥ (104,420) | ¥ (416,694) |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||
Unrealized gain/(loss) from foreign currency exchange | 1,957 | 300 | (1,770) | 1,757 |
Share-based compensation expense | 26,734 | 4,097 | 16,732 | 27,886 |
Depreciation and amortization | 18,944 | 2,903 | 26,625 | 32,970 |
Impairment loss | 7,364 | |||
Deferred taxes (benefits)/expenses | (9,931) | (1,522) | (153) | 73 |
(Gain)/loss on disposal of property, equipment | 367 | 56 | (27) | |
Changes in assets and liabilities: | ||||
Inventory | (1,627) | (249) | 308 | |
Prepaid expenses and other current assets | (53,940) | (8,267) | (16,644) | (87,412) |
Operating lease right of use assets | (41,363) | (6,339) | (56,638) | |
Other non-current assets | (8,509) | (1,304) | (538) | 1,296 |
Advances from students | 534,455 | 81,909 | 501,800 | 480,568 |
Accrued expenses and other liabilities | 66,119 | 10,133 | (27,181) | (9,959) |
Operating lease liabilities | 41,448 | 6,352 | 55,095 | |
Taxes payable | (2,373) | (364) | 4,744 | (8,068) |
Net cash provided by operating activities | 719,243 | 110,228 | 397,933 | 29,781 |
Cash flows from investing activities: | ||||
Purchases of property and equipment | (21,957) | (3,365) | (9,604) | (17,605) |
Purchase of intangible assets | (7,167) | (1,098) | (1,530) | (3,962) |
Placement of time deposits | (789,331) | (120,970) | (443,454) | (224,586) |
Placement of short-term investments | (700,251) | (107,318) | (997,564) | (190,073) |
Withdrawal of time deposits | 144,991 | 22,221 | 351,281 | 276,326 |
Withdrawal of short-term investments | 639,259 | 97,971 | 687,863 | 155,002 |
Proceeds from disposal of property and equipment | 185 | 28 | 98 | |
Net cash used in investing activities | (734,271) | (112,531) | (412,910) | (4,898) |
Cash flows from financing activities: | ||||
Share repurchase program | (23,116) | (3,543) | (6,011) | |
Proceeds from exercise of stock options | 10,330 | 1,583 | 4,334 | 1,611 |
Drawdown of short-term loan | 85,856 | |||
Proceeds from issuance of stock, net of offering expenses | 39,942 | 6,121 | ||
Short-term loan repayment | (16,367) | (2,508) | (52,859) | (19,060) |
Net cash provided by/(used in) financing activities | 10,789 | 1,653 | (54,536) | 68,407 |
Effect of exchange rate changes on cash and cash equivalents | (12,065) | (1,849) | (679) | (186) |
Net increase/(decrease) in cash and cash equivalents | (16,304) | (2,499) | (70,192) | 93,104 |
Cash and cash equivalents at the beginning of the year | 342,951 | 52,560 | 413,143 | 320,039 |
Cash and cash equivalents at the end of the year | 326,647 | 50,061 | 342,951 | 413,143 |
Supplemental disclosure of cash flow information | ||||
Cash paid for income taxes | 8,295 | 1,271 | 1,809 | 10,538 |
Cash paid for interest expenses | 90 | 14 | 3,110 | 1,944 |
Non-cash supplemental investing activities | ||||
Property and equipment and intagible assets purchases financed by accrued expenses and other current liabilities | ¥ 11,434 | $ 1,752 | ¥ 1,366 | ¥ 1,650 |
Operations and Reorganization
Operations and Reorganization | 12 Months Ended |
Dec. 31, 2020 | |
Operations and Reorganization | |
Operations and Reorganization | 1. Operations and Reorganization China Online Education Group (the ‘‘Company’’ or ‘‘COE’’), through its consolidated subsidiaries and variable interest entities (‘‘VIEs’’) and VIEs’ subsidiaries (collectively referred to as the ‘‘Group’’) is primarily engaged in providing online English language education services to students in the People’s Republic of China (the ‘‘PRC’’ or ‘‘China’’). As of December 31, 2020, the Company’s major subsidiaries and VIEs and VIEs’ subsidiaries are as follows: Percentage of Place of Date of Direct or Indirect Incorporation/ Incorporation/ Economic Company Establishment Establishment Ownership Subsidiaries China Online Education (HK) Limited Hong Kong April 1, 2013 100 % 51Talk English International Limited Hong Kong October 7, 2014 100 % China Online Innovations Inc.* Philippines October 9, 2014 99.999993 % On Demand English Innovations Inc.* Philippines January 14, 2016 99.999 % Beijing Dasheng Online Technology Co., Ltd. PRC June 4, 2013 100 % Helloworld Online Education Group Cayman July 13, 2018 100 % Helloworld Online Education Group (HK) Limited Hong Kong August 10, 2018 100 % Beijing Helloworld Online Technology Co., Ltd. PRC September 3, 2018 100 % TESOL Academy Online Limited Hong Kong February 25, 2019 100 % VIEs and VIES' subsidiaries Beijing Dasheng Zhixing Technology Co., Ltd PRC July 8, 2011 100 % 51Talk English Philippines Corporation Philippines August 3, 2012 100 % Shanghai Zhishi Education Training Co., Ltd PRC December 30, 2016 100 % Wuhan Houdezaiwu Online Technology Co., Ltd PRC January 12, 2017 100 % Beijing Dasheng Helloworld Technology Co., Ltd. PRC July 9, 2018 100 % Shenzhen Dasheng Zhiyun Technology Co., Ltd. PRC July 17, 2019 100 % * The Company directly holds the 99.999993% and 99.999% shares of China Online Innovations Inc. and On Demand English Innovations Inc. respectively. There is no substantive non-controlling interest for China Online Innovations Inc. and On Demand English Innovations Inc. as of December 31, 2019 and 2020. The non-controlling shareholders are nominee shareholders mainly consisting of local residents to comply with local regulations of the Philippines. a History of the Group and Basis of Presentation for the Reorganization The Group began operations in July 2011 through Beijing Dasheng Zhixing Technology Co., Ltd. (‘‘Dasheng Zhixing’’). The beneficial interest of Dasheng Zhixing was held by Mr. Jiajia Huang and Ms. Ting Shu (the ‘‘Founding Shareholders’’) and an angel investor in 2011. On January 5, 2012, another angel investor invested into Dasheng Zhixing. In accordance with the investment agreement, the Founding Shareholders set aside from their own holdings 15% of the ownership of Dasheng Zhixing for an employee option plan. While the plan to establish employee option plan was cancelled, the 15% ownership interest in Dasheng Zhixing was not returned to the Founding Shareholders. Consequently, beneficial interest of Dasheng Zhixing was then 71% by the Founding Shareholders and 29% held by angel investors. 1 Operations and Reorganization (Continued) Given the cost advantage and high English proficiency of teachers in the Philippines, the Group retains teachers in the Philippines. To do this, in August 2012, the Founding Shareholders established, a company in the Philippines, 51Talk English Philippines Corporation (the ‘‘Philippines Co I’’), using funds provided by Dasheng Zhixing. On September 3, 2012, Dasheng Zhixing entered into a service agreement with Philippines Co I, to formalize the business arrangements. Under the agreement, Philippines Co I provides teaching service for the Group in accordance with the Group’s instructions. In return, Dasheng Zhixing pays for all the expenses incurred for the services provided by Philippines Co I. The equity of Philippines Co I is considered to be insufficient to finance its activities without additional subordinated financial support provided by another party. As a result, Dasheng Zhixing is considered to be the primary beneficiary of Philippines Co I as it has the power to direct the activities of Philippines Co I that most significantly impact Philippines Co I’s economic performance and has obligation to absorb losses of Philippines Co I. As such, Dasheng Zhixing consolidates Philippines Co I. Dasheng Zhixing was the predecessor of the Group and operated substantially all of the businesses of the Group prior to November 2012. In order to facilitate international financing, the Group underwent a reorganization (the ‘‘Reorganization’’) from November 2012 until October 2014. In November 2012, the Founding Shareholders incorporated the Company under the Laws of the Cayman Islands to be an offshore holding company for the Group. In June 2013, the Company issued ordinary shares to the two angel investors, in exchange for their equity beneficial ownerships in Dasheng Zhixing. Following the exchange, the ownership of the Company was held 71% by the Founding Shareholders and 29% by the angel investors. In April 2013, China Online Education (HK) Limited (the ‘‘COE HK Co I’’) was incorporated in Hong Kong as a wholly owned subsidiary of the Company. Beijing Dasheng Online Technology Co. Ltd., (‘‘Dasheng Online’’), was set up in June 2013 as a wholly owned subsidiary of COE HK Co I in the PRC. Due to PRC legal restrictions on foreign ownership and investment in the companies in value-added telecommunications market, the Group continues to operate its online education platform through Dasheng Zhixing. Dasheng Zhixing holds the Internet Content Provider license (‘‘ICP’’) and domain names of www.51talk.com and www.51talk.cn that are necessary to conduct online English education services in China. To comply with PRC laws and regulations, the Group provides substantially all of its services in China via Dasheng Zhixing. On June 18, 2013, as part of the restructuring, a series of contractual agreements discussed in 1.b. below were entered into among Dasheng Online, Dasheng Zhixing and shareholders of Dasheng Zhixing. As a result of the agreements, Dasheng Online has the ability to direct substantially all the activities of Dasheng Zhixing, and absorb substantially all of the risks and rewards of the Dasheng Zhixing. Dasheng Online became the primary beneficiary of Dasheng Zhixing and consolidates the financial results of Dasheng Zhixing. The restructuring provided the beneficial interest holders of Dasheng Zhixing received an interest in the Company equal to their beneficial interest in Dasheng Zhixing. On June 3, 2019, a shareholder of Dasheng Zhixing transferred her shares to Mr. Jiajia Huang. The above contractual agreements were updated to reflect the shares transfer, without substantial change of the terms. On July 21 2014, a series of contractual agreements discussed in 1.b. below were entered into among COE HK Co I, Philippines Co I and the shareholders of Philippines Co I. Pursuant to these agreements COE HK Co I has the ability to direct substantially all the activities of Philippines Co I, and absorb substantially all of the risks and rewards of Philippines Co I. COE HK Co I replaced Dasheng Zhixing as the primary beneficiary of Philippines Co I, and the Group continued to consolidate the financial results of Philippines Co I. 1 Operations and Reorganization (Continued) To further optimize the organizational structure of the Group, in October 2014, 51 Talk English International Limited (the ‘‘COE HK Co II’’) was incorporated with limited liability in Hong Kong as a wholly owned subsidiary of COE HK Co I. China Online Innovations Inc. (the ‘‘Philippines Co II’’), which was incorporated by the Company with limited liability in the Philippines to eventually replace Philippines Co I. The Company owns 99.999993% of the equity interest of Philippines Co II. In order to comply with local laws, there are seven individual shareholders holding an aggregate of 0.000007% of the equity interest of Philippines Co II. A series of contractual arrangements was entered into among the Company, Philippines Co II and the seven individual shareholders. Under these contractual arrangements, the Company has an exclusive option to purchase all of the equity interests in Philippines Co II held by the seven individuals and to exercise their rights as shareholders of Philippines Co II. Since then, Philippine home-based teachers delivering paid lessons on the Company’s platform no longer entered into service agreements with Philippines Co I, but rather entered into service agreements with COE HK Co II. Furthermore, the bulk of the business operations in Philippines Co I was transferred to Philippines Co II, and the Group began to enter into employment agreements with office-based teachers and other full-time employees in the Philippines through Philippines Co II. To further optimize group structure, on January 14, 2016, On Demand English Innovations Inc. (the “Philippines Co III”) was incorporated by the Company with limited liability in the Philippines to replace Philippines Co I. The Company owns 99.999% of the equity interest of Philippines Co III. In order to comply with local laws, there are five individual shareholders holding an aggregate of 0.001% of the equity interest of Philippines Co III. A series of contractual arrangements was entered into among the Company, Philippines Co III and the five individual shareholders. Under these contractual arrangements, the Company has an exclusive option to purchase all of the equity interests in Philippines Co III held by the five individuals and the power to exercise their rights as shareholders of Philippines Co III. In April 2016, all business operations and assets of Philippines Co I were transferred to Philippines Co III, including the office leasehold and office equipment in Baguio City, Philippines. Philippines Co III also entered into new employment agreement with the free trial teachers and support staff previously employed by Philippines Co I. The above series of transactions to reorganize the Group were accounted for in a manner similar to a pooling of interest with assets and liabilities at their historical amounts in the Group’s consolidated financial statements. As such, the Group’s consolidated financial statements were prepared as if the current corporate structure had been in existence for all periods presented. On December 30, 2016, Dasheng Zhixing established a wholly-owned subsidiary, Shanghai Zhishi Education Training Co., Ltd.(“Zhishi Training”), of which the current registered business scope includes “education training: classic English (level 1-9)” . In January 2017, Wuhan Houdezaiwu Online Technology Co., Ltd. (“Houdezaiwu Online”), was incorporated as a wholly-owned subsidiary of Dasheng Zhixing to conduct the Group’s business operations in Wuhan. In October 2017, Tianjin Dasheng Zhixing Technology Co., Ltd.(“Tianjin Zhixing”) was incorporated as a wholly-owned subsidiary of Dasheng Zhixing to conduct the Group’s business operations in Tianjin. In July 2018, Helloworld Online Education Group (“HAWO Company”) was incorporated under the Laws of the Cayman Islands as wholly-owned subsidiary of the Company. In August 2018, Helloworld Online Education Group (HK) Limited (“HAWO HK Co”) was incorporated in Hong Kong as a wholly-owned subsidiary of HAWO Company. Beijing Helloworld Online Technology Co., Ltd. (‘‘HAWO Online’’) was set up in September 2018 as a wholly-owned subsidiary of HAWO HK Co in the PRC. In July 2018, Beijing Dasheng Helloworld Technology Co., Ltd. (“Dasheng HAWO”) was incorporated with beneficial interest held by Mr. Jiajia Huang to conduct the Group’s operations of small class business. 1 Operations and Reorganization (Continued) In September 2018, a series of contractual agreements discussed in 1.b. below were entered into among Helloworld Online, Dasheng Helloworld and shareholders of Dasheng Helloworld. As a result of the agreements, Helloworld Online has the ability to direct substantially all the activities of Dasheng Helloworld, and absorb substantially all of the risks and rewards of the Dasheng Helloworld. Helloworld Online became the primary beneficiary of Dasheng Helloworld and consolidates the financial results of Dasheng Helloworld. In February 2019, TESOL Academy Online Limited ("TESOL") was incorporated as a wholly-owned subsidiary of the Company to training the Group’s teachers to obtain the certificate of "Teaching English to Speakers of Other Languages". In July 2019, Shenzhen Dasheng Zhiyun Technology Co., Ltd. (“Dasheng Zhiyun”), was incorporated with beneficial interest held by Mr. Jiajia Huang to conduct the operations of business in Shenzhen. In July 2019, a series of contractual agreements discussed in 1.b. below were entered into among Dasheng Online, Dasheng Zhiyun and shareholders of Dasheng Zhiyun. As a result of the agreements, Dasheng Online has the ability to direct substantially all the activities of Dasheng Zhiyun, and absorb substantially all of the risks and rewards of the Dasheng Zhiyun. Dasheng Online became the primary beneficiary of Dasheng Zhiyun and consolidates the financial results of Dasheng Zhiyun. In October 2019, Tianjin Dasheng Zhixing Technology Co., Ltd.(“Tianjin Zhixing”) discontinued its operations and cancelled its registration. b Contractual agreements with VIEs The following is a summary of (i) the contracts by and among Dasheng Online, Dasheng Zhixing, and the shareholders of Dasheng Zhixing; (ii) the contracts by and among COE HK Co I, Philippines Co I, and the shareholders of Philippines Co I and (iii) the contracts by and among HAWO Online, Dasheng HAWO, and the shareholders of Dasheng HAWO (iv) the contracts by and among Dasheng Online, Dasheng Zhiyun, and the shareholders of Dasheng Zhiyun. Contractual Agreements with Dasheng Zhixing Exclusive Business Cooperation Agreements. 1 Operations and Reorganization (Continued) Exclusive Option Agreements. Powers of Attorney. Equity Interest Pledge Agreements. Contractual Agreements with Philippines Co I Exclusive Business Cooperation Agreements. 1 Operations and Reorganization (Continued) Exclusive Option Agreements. Powers of Attorney. Contractual Agreements with Dasheng HAWO Exclusive Business Cooperation Agreements. Exclusive Option Agreements. 1 Operations and Reorganization (Continued) Powers of Attorney. Equity Interest Pledge Agreements. If Dasheng HAWO or any of Dasheng HAWO's shareholders breaches its contractual obligations under the contractual arrangements, HAWO Online will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Dasheng HAWO in accordance with legal procedures. HAWO Online has the right to receive dividends generated by the pledged equity interests during the term of the pledge. The pledge will remain binding until Dasheng HAWO and the shareholders discharge all their obligations under the contractual arrangements. The equity pledge has been registered with the registration authorities of industries and commerce in accordance with PRC law. Contractual Agreements with Dasheng Zhiyun Exclusive Business Cooperation Agreements. Exclusive Option Agreements. 1 Operations and Reorganization (Continued) Powers of Attorney. Equity Interest Pledge Agreements. If Dasheng Zhiyun or any of Dasheng Zhiyun's shareholders breaches its contractual obligations under the contractual arrangements, Dasheng Online will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Dasheng Zhiyun in accordance with legal procedures. Dasheng Online has the right to receive dividends generated by the pledged equity interests during the term of the pledge. The pledge will remain binding until Dasheng Zhiyun and the shareholders discharge all their obligations under the contractual arrangements. The equity pledge has been registered with the registration authorities of industries and commerce in accordance with PRC law. 1 Operations and Reorganization (Continued) c Risks in relation to the VIE structure The following table sets forth the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs and VIEs’ subsidiaries, which were included in the Group’s consolidated balance sheets, statements of comprehensive income/(loss) and statements of cash flows: Dasheng Zhixing and its subsidiaries-Zhishi Training and Houdezaiwu Online : As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 214,081 172,511 Time deposits 50,000 692,000 Short-term investments 373,972 434,548 Prepaid expenses and other current assets 211,757 262,699 Inventory 308 1,935 Amounts due from inter-company entities* 2,610,083 825,468 Property and equipment, net 10,645 14,443 Rights of use assets 19,763 67,044 Deferred tax assets — 9,684 Other assets 11,377 24,091 Total assets 3,501,986 2,504,423 Advances from students-current 2,181,798 2,718,776 Advances from students-non-current 4,783 2,270 Accrued expenses and other current liabilities 77,050 112,453 Taxes payable 1,993 3,474 Lease liability-current and non-current 17,915 64,940 Amounts due to inter-company entities* 2,202,909 207,659 Total liabilities 4,486,448 3,109,572 * All inter-company balances have been eliminated upon consolidation. For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues 1,145,517 1,478,493 2,054,095 Net income/(loss) (253,493) (20,893) 367,241 For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash provided by/(used in) operating activities (28,969) 372,668 677,263 Net cash used in investing activities (18,595) (287,360) (718,833) Net increase/(decrease) in cash and cash equivalents (47,564) 85,308 (41,570) 1 Operations and Reorganization (Continued) Philippines Co I: As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 415 406 Prepaid expenses and other current assets 576 569 Amounts due from inter-company entities* 2,523 2,488 Total assets 3,514 3,463 Accrued expenses and other current liabilities 1,062 1,047 Taxes payable 11,766 11,603 Other non-current liabilities 247 244 Total liabilities 13,075 12,894 * All inter-company balances have been eliminated upon consolidation. For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues — — — Net loss (515) (1,843) (39) For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash used in operating activities (24) (7) — Effect of exchange rate changes on cash and cash equivalents 3 19 (9) Net increase/(decrease) in cash and cash equivalents (21) 12 (9) Dasheng HAWO: As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 743 1,516 Prepaid expenses and other current assets 4,597 5,037 Amounts due from inter-company entities* 44,672 56 Property and equipment, net 200 104 Rights of use assets 1,947 4,795 Other assets 1 34 Total assets 52,160 11,542 Amounts due to inter-company entities* 59,281 32,300 Accrued expenses and other current liabilities 7,107 7,751 Taxes payable 287 455 Lease liability 1,686 4,575 Total liabilities 68,361 45,081 * All inter-company balances have been eliminated upon consolidation. 1 Operations and Reorganization (Continued) For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues — 42,132 36,698 Net loss (1,215) (15,176) (17,621) For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash provided by operating activities 17 1,249 772 Net cash provided by / (used in) investing activities — (523) 1 Net increase in cash and cash equivalents 17 726 773 Dasheng Zhiyun: As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 827 1,006 Amounts due from inter-company entities* 1,200 2,577 Total assets 2,027 3,583 Amounts due to inter-company entities* 906 1,581 Advances from students—current 10 — Accrued expenses and other current liabilities 824 1,300 Taxes payable 77 161 Total liabilities 1,817 3,042 * All inter-company balances have been eliminated upon consolidation. For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues — 1,748 8,434 Net profit — 210 278 For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash provided by operating activities — 827 179 Net increase in cash and cash equivalents — 827 179 Under the contractual arrangements with the VIEs, the Company has the power to direct activities of the VIEs through Dasheng Online, COE HK Co I and HAWO Online, and can have assets transferred freely out of the VIEs without restrictions. Therefore, the Company considers that there is no asset of the VIEs that can only be used to settle obligations of the respective VIEs, except for registered capital of Dasheng Zhixing amounting to RMB1,143 and RMB1,143 as of December 31, 2019 and 2020, respectively. Since the VIEs are incorporated as limited liability companies under the PRC and Philippine Company Law, creditors of the VIEs do not have recourse to the general credit of the Company. There is currently no contractual arrangement that would require the Company to provide additional financial support to the VIEs. 1 Operations and Reorganization (Continued) The Group believes that the contractual arrangements among Dasheng Online, COE HK Co I and HAWO Online, the VIEs and their shareholders are in compliance with PRC and Philippine laws and regulations, as applicable, and are legally binding and enforceable. However, uncertainties in the PRC and Philippine legal system could limit the Company’s ability to enforce these contractual arrangements. On January 19, 2015, the Ministry of Commerce (“MOFCOM”), released for public comment a proposed PRC law, the Draft FIE Law, that appears to include VIEs within the scope of entities that could be considered to be foreign invested enterprises, or FIEs, that would be subject to restrictions under existing PRC law on foreign investment in certain categories of industry. Specifically, the Draft FIE Law introduces the concept of “actual control” for determining whether an entity is considered to be an FIE. In addition to control through direct or indirect ownership or equity, the Draft FIE Law includes control through contractual arrangements within the definition of “actual control.” On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020 and replaced three laws regulating foreign investment in China, namely, the Wholly Foreign-Invested Enterprise Law of the PRC, the Sino-Foreign Cooperative Joint Venture Enterprise Law of the PRC and the Sino-Foreign Equity Joint Venture Enterprise Law of the PRC, together with their implementation rules and ancillary regulations. On December 26, 2019, the State Council issued the Regulations on Implementing the Foreign Investment Law of the PRC, which came into effect on January 1, 2020, and replaced the Regulations on Implementing the Sino-Foreign Equity Joint Venture Enterprise Law, Provisional Regulations on the Duration of Sino-Foreign Equity Joint Venture Enterprise Law, the Regulations on Implementing the Wholly Foreign-Invested Enterprise Law , and the Regulations on Implementing the Sino-Foreign Cooperative Joint Venture Enterprise Law. The Foreign Investment Law of the PRC embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. Under the Foreign Investment Law of the PRC, VIEs that are controlled via contractual arrangement would not be absolutely deemed as Foreign-Invested Enterprises, or FIEs. Therefore, the current legal status of Contractual Arrangement as a whole and each of the agreements comprising the Contractual Arrangement will not be materially affected by the Foreign Investment Law of the PRC and its implementing regulations. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation. For example, the Foreign Investment Law of the PRC adds a catch-all clause to the definition of “foreign investment” so that foreign investment, by its definition, includes “investments made by foreign investors in China through other means defined by other laws or administrative regulations or provisions promulgated by the State Council” without further elaboration on the meaning of “other means.” It leaves leeway for the future legislations promulgated by the State Council to provide for contractual arrangements as a form of foreign investment. It is therefore uncertain whether the Group’s corporate structure will be seen as violating the foreign investment rules as the Group is currently leverage the contractual arrangement to operate certain businesses in which foreign investors are prohibited from or restricted to investing. Furthermore, if future legislations prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangement, the Group may face substantial uncertainties as to whether the Group can complete such actions in a timely manner, or at all. If the Group fails to take appropriate and timely measures to comply with any of these or similar regulatory compliance requirements, the Group’s current corporate structure, corporate governance and business operations could be materially and adversely affected. The Company’s ability to control the VIEs also depends on the Power of Attorney. Dasheng Online, COE HK Co I and HAWO Online have to vote on all matters requiring shareholder approval in the VIEs. As noted above, the Company believes these Power of Attorney are legally enforceable but may not be as effective as direct equity ownership. In addition, if the Group’s corporate structure or the contractual arrangements with the VIEs were found to be in violation of any existing PRC or Philippine laws and regulations, the PRC or the Philippine regulatory authorities could, within their respective jurisdictions: ● revoke the Group’s business and operating licenses; 1 Operations and Reorganization (Continued) ● require the Group to discontinue or restrict its operations; ● restrict the Group’s right to collect revenues; ● block the Group’s websites; ● require the Group to restructure the operations, re-apply for the necessary licenses or relocate the Group’s businesses, staff and assets; ● impose additional conditions or requirements with which the Group may not be able to comply; or ● take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business. The imposition of any of these restrictions or actions may result in a material adverse effect on the Group’s ability to conduct its business. In addition, if the imposition of any of these restrictions causes the Group to lose the right to direct the activities of the VIEs or the right to receive their economic benefits, the Group would no longer be able to consolidate the financial statements of the VIEs. In the opinion of management, the likelihood of losing the benefits in respect of the Group’s current ownership structure or the contractual arrangements with its VIEs is remote. As of December 31, 2019 and 2020, the aggregate accumulated deficit of the Group’s VIEs was approximately RMB1,073,067 and RMB723,209 respectively, which have been included in the Group's accompanying consolidated financial statements. d Liquidity and going concern The Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. The Group incurred net losses of RMB416,694, RMB104,420 for the years ended December 31, 2018, 2019 and earned net income of RMB146,962 for the year ended December 31, 2020, respectively. Accumulated deficits were RMB2,198,902 and RMB2,051,940 as of December 31, 2019 and 2020, respectively. The net current liabilities were RMB1,228,049 and RMB1,400,431 as of December 31, 2019 and 2020. The operating cash inflow was RMB 29,781, RMB397,933 and RMB719,243 in the years ended December 31, 2018, 2019 and 2020, respectively. The Group assesses its liquidity by its ability to generate cash from operating activities to fund its operations, attract investors and borrow funds on favorable economic terms. As of December 31, 2020, the Group's balance of cash and cash equivalents, time deposits (current and non-current) and short-term investments was RMB1,727,691, and the Group had no outstanding borrowing under credit agreements. Historically, the Group has relied principally on both operational sources of cash and non-operational sources of financing from investors to fund its operations and business development. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while controlling operating expenses, as well as, generating operational cash flows and continuing to gain support from outside sources of financing. Based on the above considerations, the Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The management is of the opinion that the Group has sufficient funds for sustainable operation and there is no substantial doubt about the Group’s ability to continue as going concern within one year after the consolidated financial statements are issued. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2 a Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. b Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and consolidated VIEs for which the Company is the primary beneficiary. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significant impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All transactions and balances among the Company, its subsidiaries and consolidated VIEs have been eliminated upon consolidation. c Use of estimates The preparation of the Group’s consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of standalone selling prices of performance obligations that have never been separately sold, estimate of prepaid credit breakage, assessment for the impairment of long-lived assets, the valuation allowance of deferred tax assets, and the valuation and recognition of share-based compensation. d Functional currency and foreign currency translation The Group uses Renminbi (‘‘RMB’’) as its reporting currency. The functional currency of the Company and its overseas subsidiaries incorporated in the Cayman Islands and Hong Kong is United States dollars (‘‘US$’’), and the functional currency of the Philippines entities is Peso (‘‘PHP’’). The functional currency of the PRC entities in the Group is RMB. In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC has been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the reporting period. Translation adjustments are reported as foreign currency translation adjustments, and are shown as a component of other comprehensive income in the consolidated statements of comprehensive income/(loss). Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in interest expenses and other expense, net. 2 e Convenience Translation Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income/(loss) and statements of cash flows from RMB into US$ as of and for the year ended December 31, 2020 are solely for the convenience of the readers and were calculated at the rate of US$1.00 = RMB6.5250, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Board on December 31, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2020, or at any other rate. f Fair value measurements Financial instruments Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value: ● Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. ● Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. ● Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Group’s financial instruments include cash and cash equivalents, time deposits, short-term investment, short-term loan, other current assets, accrued expenses and tax payable. The carrying amounts of the short-term financial instruments approximate their fair value due to their relatively short maturity. The carrying amount of the short-term loan approximates its fair value due to the fact that the related interest rate approximates the interest rates currently offered by financial institutions for similar debt instruments of comparable maturities. g Cash and cash equivalents The Group considers all highly liquid investments, which are unrestricted as to withdrawal or use, with original maturities of three months or less as cash equivalents. As of December 31, 2019 and 2020, the Group had total balance of RMB18,715 and RMB17,933 respectively, held in accounts managed by WeChat Pay, Alipay, China Merchants Bank Aggregate Paying Platform and 99bill in connection with the collection of tuition fees online, which have been classified as cash and cash equivalents on the consolidated balance sheets. 2 h Time deposits Time deposits in the current assets represent demand deposits placed with banks with original maturities of more than three months but less than one year. For the time deposits in the non-current assets, the maturities are more than one year. Interest earned is recorded as interest income in the consolidated statements of comprehensive income/(loss) during the periods. i Short-term investments Short-term investments include investments in financial instruments with a variable interest rate indexed to Shanghai Interbank Offered Rate (or “SHIBOR”), the gold price published by the London Bullion Market Association, the exchange rate of euro against dollar, or performance of underlying assets and investments, all of which are with original maturities of less than 12 months. j Held-to-maturity security A held-to-maturity investment is a non-derivative financial asset that has either fixed or determinable payments and a fixed maturity, and for which an entity has both the ability and the intention to hold to maturity. This type of investment is reported at amortized cost and the difference between the maturity value and the cost of the investments is amortized to the income statement and recognized as interest income over the life of the investments. The Group assesses whether an investment is impaired at the individual security level in each reporting period. A held-to-maturity investment is impaired if the fair value of the investment is less than its cost. If an investment is concluded to be impaired, the Group determines whether such impairment is other-than-temporary. Factors the Group consider making such determination include the duration and severity of the impairment, the reason for the decline in value and the potential recovery period and the Group’s intent to sell. If any impairment is considered other-than-temporary, the Group will write down the asset to its fair value and record the corresponding charge as impairment loss in the statement of consolidated comprehensive income/ (loss). k Expected credit losses In 2016, the FASB issued ASC Topic 326, which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses. The Group adopted this ASC Topic 326 and several associated ASUs on January 1, 2020 , and it did not have a material impact in retained earnings (accumulated deficit). The Group’s other receivables classified as prepaid expenses and other current assets and other non-current assets are within the scope of ASC Topic 326. The Group has identified the relevant risk characteristics of other receivables which include size, type of the services or the products the Group provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the life-time expected credit losses. Additionally, external data and macroeconomic factors are also considered. This is assessed at each quarter based on the Group’s specific facts and circumstances. No allowance was made for the receivables for the year ended December 31, 2020. 2 l Long-lived assets Property and equipment Property and equipment are stated at cost less accumulated depreciation, amortization and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally from three years for computers and equipment, four years for vehicles and five years for furniture and fixtures. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remaining lease term. Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of comprehensive income/(loss). Intangible assets Intangible assets mainly comprise of software, copyrights and trademarks. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization is computed using the straight-line method over the estimated useful lives of the intangible assets, generally ten years for trademarks and major accounting and ERP software, three years for other software, and three Goodwill Goodwill represents the excess of the purchase price over the fair value of the identifiable assets and liabilities of 91waijiao.com Goodwill is not depreciated or amortized but is tested for impairment at the reporting unit level on an annual basis every December 31, and in between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. The Group first has the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. For those reporting units where it is determined that it is more likely than not that their fair values are less than the units’ carrying amounts, the fair value of a reporting unit is compared to its carrying value. If the carrying value of the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference. The Group as a whole, including acquired 91waijiao.com, is determined to be two reporting units for goodwill impairment testing, the one-on-one offerings and the small class offerings. The Group assessed goodwill for impairment in accordance with ASC 2017-04, "Simplifying the Test for Goodwill impairment", which removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment charge will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. No goodwill impairment was recognizing of goodwill for the year ended 2018, 2019 and 2020. 2 Impairment of long-lived assets Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significantly adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment charge was recognized for any of the periods presented. m Revenue recognition Revenues of the Group are generated from providing online English language education services, delivered using learning materials and textbook. Students purchase the services by subscribing to prepaid credit packages or prepaid membership packages directly from the Group or through authorized distribution agents. Tuition is generally paid in advance and is initially recorded as advances from students. The Group adopted ASC 606 "Revenue from Contracts with Customers" on January 1, 2018, using the modified retrospective method. In according with ASC 606, revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those services. The Group is responsible for course design, teacher sourcing and training, development and maintenance of online platform and system, and is the party primarily responsible for fulfilling the promise to provide the services to customers and it has full discretion in establishing the prices for the services provided to customers. Hence, the Group is the principal for providing the online English education services to customers. Therefore, the Group recognizes revenue on a gross basis. The Group allows refund of fees corresponding to any remaining undelivered services when customers withdraw contracts with the Group within a certain period after the purchase. Refunds are recorded as reductions of the advances from students and true up adjustments were made on the recognized revenue of the contracts. 2 Prepaid credit packages Prepaid credit packages for one-on-one lessons typically contain 20 to 720 lesson credits with validity periods from 3 months to 60 months. The students can book lessons within the validity period. Prepaid credit packages for small class lessons typically range from approximately one Certain prepaid credit packages contain a combination of credits for one-on-one lesson, group lessons and learning materials, or a combination of credits for small class lessons from foreign teachers and Chinese teachers. Revenue from prepaid credit packages is recognized when the lesson credit is taken, and revenue from learning materials is recognized when learning materials are made available to students. Actual usage is tracked on a contract-by-contract basis. At each reporting date, the Group estimates losses, or forfeiture of prepaid credits. Based on the Group’s analysis of historical customer forfeitures of prepaid credits, the Group has concluded that no losses should be recognized for the year 2019 and 2020. For prepaid credit packages that contain a combination of lessons, learning materials and textbooks, each lesson and learning materials in each packages are a separate performance obligation, as customers can benefit from each lesson and learning materials on its own, and the Group’s promise to deliver each lesson and learning materials to the customer is separately identifiable from other promises in the contract. Package consideration is allocated to each performance obligation at contract inception based on standalone selling price of each performance obligation. For lessons that have never been sold on a standalone basis, the Group estimates their standalone selling price based on cost plus an expected margin. Because the validity period of packages is up to 60 months and because of the practice of upfront cash collection, payment by customers could occur significantly before performance. However, the timing of the transfer of related services is at the discretion of the customers. Therefore, the Group does not recognize any financing component in the determination of revenue from the sale of prepaid credit packages. Learning materials Beginning in 2019, the Group provides the learning materials to the students. Learning materials typically contain two hundred online audio picture books to the K-12 students or twenty-six recorded lessons to adult students. The students can download, read and watch the learning materials in the applications of the Group. The learning materials, included in the prepaid credit packages, are recognized as revenues when it is available for students to access. The Group estimates the standalone selling price of learning materials by reference to the standalone selling price of same type of learning materials in the market. Textbook The student, who has purchased the prepaid credit packages, can exchange the physical textbook with 3 one-on-one lessons for the K-12 Philippine prepaid credit packages. The revenue is recognized when the textbook is delivered. 2 Prepaid membership packages The Group previously sold prepaid membership packages, which ranged from 3 months to 36 months. Students were able to book one lesson per day within their membership period and the package subscription fees were paid in advance. The Group ceased the sale of such prepaid membership packages since 2017. Revenue from the remaining life of previously sold prepaid membership packages was recognized on a straight-line basis over the remaining membership period. The Group elects not to adjust the effects of a significant financing component for prepaid membership package with duration of one year The Group offers free-trial lessons to students upon registration. Students are not obligated to subscribe any course packages with the Group to obtain the free-trial lessons. The Group records the cost incurred in providing the free-trial lessons as sales and marketing expenses when the lesson is booked and taken by the students. Revenue Disaggregation The following table presents the Group’s revenues disaggregated by timing of transfer of services: For the year ended, For the year ended, For the year ended, December 31, 2018 December 31, 2019 December 31, 2020 RMB RMB RMB RMB RMB RMB RMB RMB RMB One-on-one Small class One-on-one Small class One-on-one Small class offerings offerings Total offerings offerings Total offerings offerings Total Revenues from prepaid credit packages 1,013,803 100,748 1,114,551 1,351,405 112,787 1,464,192 1,950,932 97,082 2,048,014 —credits for lessons 1,013,803 100,748 1,114,551 1,247,401 112,787 1,360,188 1,766,183 95,282 1,861,465 —credits for learning materials — — — 101,248 — 101,248 164,494 1,800 166,294 — physical textbook and learning machine — — — 2,756 — 2,756 20,255 — 20,255 Revenues from prepaid membership packages 30,966 — 30,966 14,301 — 14,301 6,081 — 6,081 Total revenues 1,044,769 100,748 1,145,517 1,365,706 112,787 1,478,493 1,957,013 97,082 2,054,095 Contract balances Contract cost Incremental costs of obtaining a contract with a customer is recognized as an asset in “Prepaid expenses and other current assets” if the Group expects to recover those costs. Incremental costs of obtaining a contract mainly include sales commissions to sales personnel and distribution agents, as well as certain cash incentives for customers who provide referrals service for the group. Contract cost assets are amortized on the basis consistent with the pattern of the transfer of services to which the assets relate. As of December 31, 2020, the balance of capitalized costs of obtaining contracts with customers was RMB199,873. For the year ended December 31, 2018, 2019 and 2020, the Group recognized amortization of RMB86,394, RMB142,772 and RMB182,134 respectively as “Sales and marketing expenses” in its consolidated statements of comprehensive income/(loss). No impairment of contract cost assets was recognized for the years ended December 31, 2018, 2019 and 2020. 2 Contract liability Contract liability is related to the payments received by the Group in advance from customers representing the Group’s obligations to perform services or transfer learning materials to customers. The Group generally receives contract payments in advance and records the consideration as advances from students. Given that the Group permits refund of fees corresponding to remaining undelivered services when customers withdraw contracts with the Group within certain period after the purchase, contract liability does not include the amounts that may be refunded in the future if customers withdraw for any remaining undelivered lessons. Refund liability is estimated based on the historical refund data and the length of remaining period customers are eligible for refund for each contract at the end of each reporting period. As of December 31, 2018 December 31, 2019 December 31, 2020 RMB RMB RMB Contract liability 1,559,875 2,029,872 2,529,915 Future output VAT associated with contract liability 93,593 121,887 151,795 Refund liability 22,653 24,255 35,407 Deposits from students 8,670 10,577 3,929 Advances from students 1,684,791 2,186,591 2,721,046 The additions to the contract liability balance were primarily due to cash collections received in advance of gaining performance obligations, while the reductions to the contract liability balance were primarily due to the recognition of revenues upon fulfillment of performance obligations, as well as refund of fees corresponding to any remaining undelivered services when customers withdraw contracts with the Group within certain period after the purchase, all of which were in the ordinary course of business. RMB1,165,093 of revenues recognized in year ended December 31, 2020 was included in the contract liability balance as of January 1, 2020. No revenue was recognized in the year ended December 31, 2020 from performance obligations satisfied (or partially satisfied) in previous periods. As of December 31, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations is RMB2,529,915. These revenues will be recognized is at the discretion of customers. The Group expects to recognize substantially all of this balance as revenue over the next 12 to 18 months, and the remainder thereafter. n Cost of revenues Cost of revenues primarily includes service expenses involved in the delivery of paid courses and payment processing fees paid to payment channels for processing the payments from students, as these components are necessary to obtain the net revenues. These costs are expensed as incurred except for payment processing fees associated with advances from students, which are recognized in the period in which the related revenues are recognized. The indirect cost of server, bandwidth and printing of textbooks is expensed as incurred. The cost of license is computed using the straight-line method over the contract term of copyrights, generally five years for Highlights. The license of Highlights is used for the online audio picture books in the learning materials. o Product development expenses Product development expenses consist primarily of payroll-related expenses incurred for the innovation of course content, as well as the development and enhancement to the Group’s websites and platforms of applications. The Group expenses all costs incurred for the planning and post implementation phases of development and costs associated with repair or maintenance of the existing platform. Since the inception, the amount of costs qualifying for capitalization has been immaterial and, as a result, all development costs have been expensed as incurred. 2 p Sales and marketing expenses Sales and marketing expenses consist primarily of marketing and promotional expenses, salaries and benefits expenses related to the Group’s sales and marketing personnel and office rental, depreciation and other expenses related to the Group’s sales and marketing team. Starting from January 1, 2018, the Group capitalizes incremental cost to obtain contracts with customers, including sales commissions to sales personnel and distribution agents, as well as certain cash incentive for customer. Amortization of related contract cost assets is recognized as sales and marketing expenses. Advertising expenses consist primarily of costs for the promotion of corporate image and product marketing. The Group expenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. For the years ended December 31, 2018, 2019 and 2020, the advertising expenses were RMB285,005, RMB281,076 and RMB372,291, respectively. q Operating leases The Group adopted the new accounting standard update on leases from January 1, 2019. The Group has operating leases primarily for office space. The determination of whether an arrangement is a lease or contains a lease is made at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Group obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the Group’s operating leases, the Group generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating right of use assets are generally recognized based on the amount of the initial measurement of the lease liability. The Group’s leases have remaining lease terms of up to five years. Lease expense is recognized on a straight-line basis over the lease term. Operating leases are included in operating lease right of use assets, short-term lease liabilities and long-term liabilities on the Group’s consolidated balance sheets. The Group has no financial leases for any of the periods presented. The Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less. Rental expenses incurred were RMB35,060, RMB42,468 and RMB46,948 for the years ended December 31, 2018, 2019 and 2020, respectively. 2 r Share-based compensation The Group accounts for share-based awards granted to employees in accordance with ASC 718. In accordance with the guidance, the Group determines whether a share-based award should be classified and accounted for as a liability award or equity award. For options granted to employees, the related share-based compensation expense is recognized in the financial statements based on their grant date fair values, which are calculated using the binomial option pricing model. The binomial option pricing model requires a number of complex assumptions. The determination of the fair value is affected by the share price as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected employee share option exercise behavior, risk-free interest rates and expected dividends. Share-based compensation expense is recorded net of estimated forfeitures, such that expenses are recorded only for those share-based awards that are expected to ultimately vest. In April 2018, FASB issued ASU 2018-07, which amended ASC 718 to apply to most aspects of awards issued to nonemployees. ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Group adopted ASU 2018-07 for share-based awards to non-employees in December 31, 2019 when the awards are within the scope of ASC 718. The forfeiture rate is the estimated annual rate at which unvested awards will be forfeited during the next year, which differs significantly by employee group. For directors and executive officers, the forfeiture rate is estimated to be zero because the possibility of their termination is remote. For employees, the forfeitures of stock options are estimated by historical actual forfeitures due to grantees’ termination prior to vesting, and the forfeiture rate will be adjusted over the requisite service period to the extent that actual forfeiture rate differs, or is expected to differ from such estimates. Changes in the estimated forfeiture rate will be recognized through a cumulative catch-up adjustment in the period of change. Share-based compensation expenses were allocated to operating expenses as follows: For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ Sales and marketing expenses (5,676) (2,951) (8,835) (1,354) Product development expenses (7,396) (3,472) (4,477) (686) General and administrative expenses (14,814) (10,309) (13,422) (2,057) Total (27,886) (16,732) (26,734) (4,097) s Employee benefits PRC Contribution Plan Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary and consolidated VIEs of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributi |
Risks and Concentration
Risks and Concentration | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Concentration | |
Risks and Concentration | 3 Risks and Concentration a Concentration of credit risk Financial instruments that potentially subject the Group to concentration of credit risk consist primarily of cash and cash equivalents and time deposits. The Group limits its exposure to credit loss by depositing its cash and cash equivalents and time deposits with financial institutions in the PRC, Hong Kong, Philippines and the United States, which are among the largest and most reputable banks with high ratings from internationally-recognized rating agencies, which management believes are of high credit quality. The Group periodically reviews these institutions’ reputations, track records and reported reserves. As of December 31, 2019 and 2020, the Group had RMB51,077 and RMB76,941 in cash and cash equivalents with a large bank in Hong Kong, respectively. Hong Kong has an official Deposit Protection Scheme (DPS), similar to the Federal Deposit Insurance Corporation (FDIC) in the United States. Deposits in the licensed banks are protected by DPS, up to a limit of HKD500,000. In addition, the Group believes that the risk of failure of the Hong Kong bank is remote. As of December 31, 2019 and 2020, the Group had RMB205,854 and RMB165,936 in cash and cash equivalents, RMB213,509 and RMB846,408 time deposits with large domestic banks in China, respectively. In May 2015, a new Deposit Insurance System (DIS) managed by the People’s Bank of China (''PBOC'') was implemented by the Chinese government. Deposits in the licensed banks are protected by DIS, up to a limit of RMB500,000. In addition, the Group believes that the risk of failure of the banks in China is remote. Short-term investments include investments in financial instruments with a variable interest rate indexed to performance of underlying assets and investments that the Group has positive intent and ability to hold to maturity, all of which are with an original maturity of less than 12 months. Any negative events or deterioration in financial well-being with respect to the counterparties of the above investments and the underlying collateral may cause a material loss to the Group and have a material effect on the Group’s financial condition and results of operations. b Major customers and supplying channels There were no customers whose revenues individually represent greater than 10% of the total revenues of the Group for the years ended December 31, 2018, 2019 and 2020. Also there were no distribution channels that individually represent greater than 10% of the total revenues of the Group for the years ended December 31, 2018, 2019 and 2020. c Concentration of foreign currency risks For the years ended December 31, 2019 and 2020, the majority of the Group’s revenues derived were in RMB. As of December 31, 2019 and 2020, the Group’s cash and cash equivalents, time deposits and short-term investments balances denominated in RMB were RMB693,328 and RMB1,352,909, accounting for 65.8% and 78.3% of the Group’s total cash and cash equivalents, time deposits and short-term investments balance. As of December 31, 2019 and 2020, the Group’s liabilities balances denominated in RMB were RMB2,361,355 and RMB3,003,951, accounting for 96.4% and 97.6% of its total liabilities balance, respectively. RMB is not freely convertible into foreign currencies. The value of the RMB is affected by changes in central government policies and international economic and political developments. In PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by PBOC. Remittances in currencies other than RMB by companies in China must be processed through PBOC or other PRC foreign exchange regulatory bodies and requires certain supporting documentation in order to affect the remittance. 3 Risks and Concentration (Continued) d Foreign currency exchange rate risks All of the Group’s revenues are denominated in Renminbi, and a significant portion of the costs are incurred in U.S. dollars and Philippine Pesos, including service fee payments to nearly all of the teachers. The Philippines continues to experience inflation, currency declines and shortages of foreign exchange. The value of RMB against the U.S. dollar may fluctuate significantly and unpredictably. The fluctuations of the RMB against the US$ was approximately 5.7% appreciation, 1.4% appreciation and 6.5% depreciation in 2018, 2019 and 2020, respectively. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the US$ in the future. The Group is exposed to the risk of cost increases due to inflation in the Philippines and the depreciation of Renminbi. As the Group currently engages a third-party vendor to handle the payment of the service fees of the independently contracted teachers in the Philippines and in North America, and the Group settles the balance with them in Hong Kong dollars, the Group is also exposed to the risk of an increase in the value of the Hong Kong dollar relative to Renminbi. The Group does not currently engage in any transactions as a hedge against risk of loss due to foreign currency fluctuations. |
Prepaid expenses and other curr
Prepaid expenses and other current assets | 12 Months Ended |
Dec. 31, 2020 | |
Prepaid expenses and other current assets | |
Prepaid expenses and other current assets | 4 Prepaid expenses and other current assets Prepaid expenses and other current assets consist of the following: As of December 31, 2019 2020 RMB RMB Costs to obtain contracts with customers 168,571 199,873 Prepaid taxes 13,860 25,600 Prepaid advertising expenses 18,014 19,977 Prepaid rental and other deposits 13,601 14,514 Interest receivables 2,430 10,231 Prepaid fees to third-party payment channels 8,250 8,980 Prepaid professional service fees 3,704 3,738 Advances to employees 1,658 1,723 Prepaid Directors & Officers insurance 782 852 Student tuition payments in transit 1,291 603 Prepaid PayPal to pay teacher salary costs 4,077 561 Prepaid student acquisition fees 2,093 29 Others 11,884 15,376 Total 250,215 302,057 |
Property and equipment, net
Property and equipment, net | 12 Months Ended |
Dec. 31, 2020 | |
Property and equipment, net | |
Property and equipment, net | 5 Property and equipment, net Property and equipment consist of the following: As of December 31, 2019 2020 RMB RMB Computers and equipment 63,663 70,923 Leasehold improvement 45,498 50,363 Furniture and fixtures 10,963 11,753 Vehicle 228 228 Total 120,352 133,267 Less: Accumulated depreciation (100,016) (112,092) Property and equipment, net 20,336 21,175 For the years ended December 31, 2018, 2019 and 2020, depreciation expenses amounted to RMB29,288, RMB22,698 and RMB15,127, respectively. |
Intangible assets, net
Intangible assets, net | 12 Months Ended |
Dec. 31, 2020 | |
Intangible assets, net | |
Intangible assets, net | 6 Intangible assets, net The following table summarizes the Group’s intangible assets, net: As of December 31, 2019 2020 RMB RMB Trademark 2,366 2,900 Computer software 12,958 24,956 Copyright for teaching materials 6,992 7,946 Total 22,316 35,802 Less: Accumulated amortization (12,398) (15,500) Intangible assets, net 9,918 20,302 For the years ended December 31, 2018, 2019 and 2020, amortization expenses amounted to RMB3,682, RMB3,927 and RMB3,817 respectively. As of December 31, 2020, amortization expense of intangible assets for future years is expected to be as follows: Amortization Expense RMB 2021 6,822 2022 5,681 2023 4,874 2024 782 2025 and thereafter 2,143 20,302 |
Operating Leases
Operating Leases | 12 Months Ended |
Dec. 31, 2020 | |
Operating Leases | |
Operating Leases | 7 Operating Leases Leases are classified as operating leases or finance leases in accordance with ASC842. The Group has operating leases for office space that the Group utilizes under lease arrangements. For leases with terms greater than 12 months, the Group records the related assets and lease liability at the present value of lease payments over the terms. Certain leases include rental escalation clauses, renewal options and/or termination options, which are factored into the Group’s determination of lease payments when appropriate. As of the December 31, 2019 and 2020, the Group has no significant finance lease. The components of lease expense for the years ended December 31, 2019 and 2020 were as follows: As of December 31, As of December 31, 2019 2020 RMB RMB Operating lease cost 40,926 46,092 Lease cost for leases with terms less than one year 1,542 856 Total lease cost 42,468 46,948 For the year ended December 31, 2019 and 2020, there is no variable lease cost and sublease income recognized in the financial statements of the Group. Maturities of lease liabilities were as follows: As of December 31, 2020 RMB 2021 43,885 2022 30,278 2023 16,970 2024 8,040 2025 and thereafter 4,111 Total undiscounted lease payments 103,284 Less: imputed interest (6,741) Total lease liabilities 96,543 The following table provides a summary of the Group’s lease terms and discount rates for the years ended December 31, 2019 and 2020: As of December 31, As of December 31, 2019 2020 Weighted average remaining lease term(years) 2.40 2.77 Weighted average discount rate(percentage) 5.04 % 4.88 % Supplemental information related to the Group’s operating leases for the year ended December 31, 2019 and 2020 are as follows: For the year ended December 31, For the year ended December 31, 2019 2020 Cash paid for operating leases 40,840 43,190 Right of use assets obtained in exchange for operating lease liabilities 38,407 81,663 |
Accrued expenses and other curr
Accrued expenses and other current liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Accrued expenses and other current liabilities | |
Accrued expenses and other current liabilities | 8 Accrued expenses and other current liabilities Accrued expenses and other current liabilities consist of the following: As of December 31, 2019 2020 RMB RMB Salaries, welfare and outsourcing fee payable 94,939 117,505 Accrued advertising and other expenses 36,464 68,719 Accrued professional service fees 9,847 12,566 Security deposits from agents 3,546 9,408 Advance from agents 3,366 7,041 Accrued rental and property management fees 802 2,197 Accrued intangible assets 1,150 8,866 Accrued staff reimbursements 13,315 7,049 Others 3,526 3,750 Total 166,955 237,101 |
Short-term loan
Short-term loan | 12 Months Ended |
Dec. 31, 2020 | |
Short-term loan | |
Short-term loan | 9 Short-term loan The Group entered into a 24-month uncollateralized, non-revolving loan facility agreement with a bank in March 2018, and related amendment agreement in August 2018 (together the “2018 Facility Agreement”). Pursuant to the 2018 Facility Agreement, the Group can borrow up to US$13,000 at a floating interest rate of 3 months London Interbank Offered Rate (LIBOR) +4.36% (total rates of 6.37% as of December 31, 2019). The Group is subject to certain financial covenants under the 2018 Facility Agreement, including a maximum quarterly student refund rate, and a minimum quarterly gross billing amount. During the contract period, the Group was always in compliance with these covenants. The Group drew down US$13,000 during 2018, and repaid US$2,958, US$7,666 and US$2,376 of loan principal for the year ended December 31, 2018, December 31, 2019 and December 31, 2020, respectively. Interest expense for the year ended December 31, 2018, 2019 and 2020 was RMB1,944, RMB3,110 and RMB90, respectively. The loan balance outstanding as of December 31, 2019 was due in March 2020 and the Group paid the total amount of the loan in January 2020. |
Taxation
Taxation | 12 Months Ended |
Dec. 31, 2020 | |
Taxation | |
Taxation | 10 Taxation a PRC Value Added Tax The Group’s subsidiaries and VIEs incorporated in China are subject to 6% VAT for revenues from providing online English language education services, 9% VAT for revenues from providing online learning materials(10% VAT before April, 2019) and 13% VAT for revenues from selling textbooks. To record VAT payable, the Group adopted the net presentation method, which presents the difference between the output VAT (at a rate of 6%, 9%, 10% and 13%) and the available input VAT amount (at the rate applicable to the supplier). Output VAT is an amount collected from customers on behalf of government, and is not included in the transaction price with customers. b Income taxes Cayman Islands Under the current tax laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. 10 Taxation (Continued) Hong Kong Commencing from the year of assessment 2019/2020, the first HK$2 million of profits earned by the Group’s subsidiaries incorporated in Hong Kong will be taxed at half the current tax rate (i.e., 8.25% ) while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Payments of dividends by the subsidiary to the Company are not subject to withholding tax in Hong Kong. Philippines Entities incorporated in the Philippines are subject to enterprise income tax in the Philippines at a rate of 30%. As of December 31, 2019 and 2020, the Company’s subsidiaries and VIE in the Philippines had an accumulated profit. The deferred tax assets for the Philippine subsidiaries and VIE as at December 31, 2019 and 2020 are mainly from accrued expenses and other current liabilities, for which no valuation allowance has been provided, as management believes it is more likely than not that these assets will be realized in the future. Payments of dividends by Philippines Co I, Philippines Co II and Philippines Co III are subject to withholding tax in the Philippines at the rate of 30%. As of December 31, 2018, 2019 and 2020, the Group did not record any withholding tax on the retained earnings of its subsidiaries and consolidated VIE in the Philippines, as the impact was immaterial as of December 31, 2018, 2019 and 2020. Philippines Co II has been registered with the Philippine Economic Zone Authority, or PEZA , as an Eco zone IT Enterprise since December 19, 2014. As such, it is entitled to an income tax holiday, or 100% exemption from corporate income tax, for four years from its PEZA registration, the tax and duty free importation of raw materials, capital equipment, machineries and spare parts, VAT zero-rating for local purchases of goods and services, and exemption from payment of local government imposts, fees, licenses, and taxes, and exemption from expanded withholding tax under Philippines tax law. The income tax holiday was extended to March, 2020. Philippine Co II has submitted certain document to extend another three years of the income tax holiday status, and they are still under evaluation of tax authority as of the financial statements issuance date. Since Philippines Co I and Philippines Co III are not within any special economic zone territory, these corporations are subject to a corporate income tax of 30% of the taxable net income on all income derived during each taxable year from sources within and outside of the Philippines. In addition to the 30% corporate income tax, these two companies are also subject to 12% of Value Added Tax on all income generated within the Philippines. PRC Effective January 1, 2008, the Enterprise Income Tax Law (the “EIT Law”) in China unifies the enterprise income tax rate for the entities incorporated in China at 25% and grants preferential tax treatment to High and New Technology Enterprises (“HNTEs”) and Software Enterprises. Under these preferential tax treatments, HNTEs are entitled to an income tax rate of 15%. In December 2016, Dasheng Online obtained the HNTEs certification and renewed the certification in December 2019. Dasheng Online was subject to preferential tax rate of 15% for the years ended December 31, 2018, 2019 and 2020. The Company’s consolidated VIEs operated in PRC were subject to tax statutory rate of 25% for the years ended December 31, 2018, 2019 and 2020. The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC should be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” 10 Taxation (Continued) In addition, the SAT Circular 82 issued by the SAT in April 2009 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued the SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details of determination on resident status and administration on post-determination matters. Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its operations outside of the PRC should be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history of the EIT Law, should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008. PRC Withholding Tax on Dividends The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a foreign-invested entity (“FIE”) to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the Previous EIT Law. The Cayman Islands, where the Company incorporated, does not have such tax treaty with China. According to the arrangement between Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE). The State Administration of Taxation (“SAT”) further promulgated Notice 9 on February 3, 2018, which provides that a “beneficial owner” refers to a person who has ownership and disposal rights to the income or any rights and assets arising from such income, and the tax authority is discretionary to determine whether an enterprise is determined as a “beneficial owner.” Dasheng Zhixing, Dasheng HAWO, Dasheng Zhiyun and their subsidiaries are controlled by the Company through various contractual agreements. To the extent that Dasheng Zhixing, Dasheng HAWO, Dasheng Zhiyun and their subsidiaries have undistributed earnings; the Company will accrue appropriate expected tax associated with repatriation of such undistributed earnings. As of December 31, 2018, 2019 and 2020, the Company did not record any withholding tax on the retained earnings of its subsidiary and consolidated VIEs in the PRC as they were still in accumulated deficit position. For the year ended December 31, 2018 2019 2020 Overseas PRC Overseas PRC Overseas PRC entities entities Total entities entities Total entities entities Total RMB RMB RMB RMB RMB RMB RMB RMB RMB Income/(loss) before income tax expenses 13,490 (426,304) (412,814) 61,124 (160,476) (99,352) 25,645 117,216 142,861 Current income tax expenses 3,807 — 3,807 5,221 — 5,221 5,802 28 5,830 Deferred income tax expenses/(benefits) 176 (103) 73 (132) (21) (153) (247) (9,684) (9,931) Income tax expenses/(benefits) 3,983 (103) 3,880 5,089 (21) 5,068 5,555 (9,656) (4,101) 10 Taxation (Continued) The combined effects of the income tax exemption and reduction available to the Group are as follows (in thousands, except per share data): Year Ended December 31, 2018 2019 2020 Tax holiday effect 1,385 622 (13,163) Basic and diluted loss per share effect 0.00 0.00 (0.04) Reconciliation of the differences between statutory tax rate and the effective tax rate for China operations Reconciliation of the differences between the PRC statutory tax rate of 25% and the Group's effective tax rate is as follows: As of December 31, 2018 2019 2020 PRC statutory tax rate 25.00 % 25.00 % 25.00 % Effect on tax rates in different tax jurisdiction (0.78) % 0.08 % (0.44) % Effect on tax holiday 0.34 % 0.99 % 9.21 % Changes in valuation allowance (8.14) % (16.91) % (38.91) % Permanent book-tax differences—non-deductible expenses (17.36) % (14.26) % 2.27 % Effective tax rate (0.94) % (5.10) % (2.87) % c. Deferred Tax Assets and Liabilities Deferred taxes were measured using the enacted tax rates for the periods in which they are expected to be reversed. Significant components of the Group’s deferred tax assets are as follows: As of December 31, 2019 2020 RMB RMB Deferred tax assets Tax loss carryforwards 241,136 175,198 Accruals and other liabilities 3,458 6,414 Advertising expenses carryforwards 73,182 83,290 Share based compensation — 2,856 Intra-company intangible assets transfer — 11,946 Defined benefits liabilities 337 584 Total deferred tax assets 318,113 280,288 Less: Deferred tax liabilities - deffered sales commissions (42,143) (49,968) Less: Valuation allowance (275,633) (220,052) Total deferred tax assets, net 337 10,268 RMBnil, RMB6,813, RMB220,631, RMB44,279 and RMB89,803 of the tax loss carryforwards will expire in the years ended December 31, 2021, 2022, 2023, 2024 and 2025, respectively. Based on available evidence, both positive and negative, the Group believes it is more-likely-than-not that the deferred tax assets for Beijing Zhixing, one of the Group’s VIE, will be partially realizable. Beijing Zhixing has maintained a gain position since 2019Q3, and the Group’s forecast for the future represents an increasing trend. The Group believes the VIE’s valuation allowance would be reversed partially considering historical taxable income, projected future taxable income, and the expected timing of the reversals of existing taxable temporary differences. 10 Taxation (Continued) The Group’s judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute our business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the Group’s income tax provision would increase or decrease in the period in which the assessment is changed. Movement of Valuation Allowance The following table shows the movement of valuation allowance for the periods presented: For the year ended December 31, 2019 2020 RMB RMB Balance at beginning of the year (258,835) (275,633) Provision (25,727) (50,258) Current period reversal 8,929 105,839 Balance at end of the year (275,633) (220,052) |
Ordinary shares
Ordinary shares | 12 Months Ended |
Dec. 31, 2020 | |
Ordinary shares | |
Ordinary shares | 11 Ordinary shares Immediately prior to the completion of the IPO, the Company adopted a dual class share structure. All of the outstanding ordinary shares prior to the completion of the IPO were automatically redesignated or converted into Class B ordinary shares on a one-for-one basis, and all ordinary shares issued in or after the completion of the IPO are Class A ordinary shares. All share-based awards, regardless of grant dates, will entitle holders to the equivalent number of Class A shares once the vesting and exercising conditions on such share-based compensation awards are met. Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of the Company's shareholders, except as may otherwise be required by law. Each holder of class A ordinary shares is intitled to one vote per share and each holder of class B ordinary shares is entitled to ten votes per share on all matters submitted to them for a vote. On June 4, 2020, the Company completed its follow-on offering on the New York Stock Exchange. The Company sold 4,907,100 Class A ordinary shares at US$1.27 per share, including the exercise of the over-allotment option. The total gross capital raise was approximately RMB44,004 (US$6,216). As of December 31, 2019 and 2020, 1,500,000,000 ordinary shares have been authorized, including (i) 1,000,000,000 Class A ordinary shares of a par value of US$0.0001 each, (ii) 350,000,000 Class B ordinary shares of a par value of US$0.0001 each and (iii) 150,000,000 shares of a par value of US$0.0001 each of such class or classes however designated by the Board of Directors. As of December 31, 2019, 313,857,894 ordinary shares have been issued, of which 90,744,233 were Class A ordinary shares and 223,113,661 were Class B ordinary shares. 312,051,174 ordinary shares are outstanding, of which 88,937,513 were Class A ordinary shares and 223,113,661 were Class B ordinary shares. As of December 31, 2020, 325,733,064 ordinary shares have been issued, of which 196,045,898 were Class A ordinary shares and 129,687,166 were Class B ordinary shares. 323,640,564 ordinary shares are outstanding, of which 193,953,398 were Class A ordinary shares and 129,687,166 were Class B ordinary shares. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Compensation | |
Share-based Compensation | 12 Share-based Compensation The Company adopted 2013 Employee Stock Option Plan (the “2013 Plan”), 2014 Employee Stock Option Plan (the “2014 Plan”, collectively the “Pre-IPO Plans”). In May 2016, the Company adopted the 2016 Share Incentive Plan (“2016 Plan”). The Pre-IPO Plans and 2016 Plan allow the plan administrator to grant stock options, share appreciation rights, dividend equivalent right, restricted share units and restricted shares to employees, directors and consultants of the Company and its affiliates, up to a maximum of 36,229,922 and 4,600,000 Class A ordinary shares, respectively, plus an annual increase of 1.5% of the total outstanding share capital as of December 31 of the immediately preceding calendar year on the first day of each fiscal year, beginning in 2017, or such lesser number of Class A ordinary shares as determined by the board of directors of the Company. If an award under the Pre-IPO Plans terminates, expires or lapses, or is cancelled for any reason, ordinary shares subject to the award become available for the grant of a new award under the 2016 Plan. As of December 31, 2020, after consideration of adjustments for the annual increase and other changes, a total of 14,978,899 Class A ordinary shares are available under the plans. Under the 2013 Plan and 2014 Plan, the Company granted options to employees. All options granted have a contractual term of ten years, and most of options vest over a three-year or four-year requisite service period, depending on the terms of each award agreement. And granted options generally follow one of the three vesting schedules (“Schedule A”, “Schedule B”, “Schedule C”) below: ● Schedule A: one half (½) of which vest upon the second anniversary of the date of vesting commencement date and 25% of the options vest at the third and fourth anniversary respectively; ● Schedule B: 25% of the options vest at each of the four anniversaries; ● Schedule C: 33% of the options vest at each of the three anniversaries; The Company granted restricted share units (“RSUs”) under the 2016 Plan. Most of RSUs vest over a period of two-year or four-year requisite service period. And granted RSUs generally follow one of the four vesting schedules (“Schedule D”, “Schedule E”, “Schedule F”, “Schedule G”) below: ● Schedule D: one half (½) of which vest upon the second anniversary of the date of vesting commencement date and 25% of the options vest at the third and fourth anniversary respectively ● Schedule E: 6.25% of the RSUs vest at each of the sixteen quarters after vesting commencement date; ● Schedule F: 25% of the RSUs vest at each of the four anniversaries; ● Schedule G: 50% of the RSUs vest at each of the two anniversaries; For the years ended December 31, 2018, 2019 and 2020, total share-based compensation expenses recognized were RMB27,886, RMB16,732 and RMB26,734, respectively. As of December 31, 2020, the unrecognized compensation cost was RMB48,416. These amounts are expected to be recognized over a weighted average period of 2.24 years. 12 Share-based Compensation (Continued) Stock options The Group uses the Binomial option pricing model to estimate the fair value of stock options. The assumptions used to value the Company’s option grants were as follows: For the year ended December 31, 2018 2019 2020 Stock options: Contractual term (in years) 10.00-10.00 9.92-10.00 10.00-10.00 Expected volatility 48.0%-49.2% 48.1%-51.0% 51.0%-58.0% Exercise multiple 2.2-2.8 2.2-2.8 2.2-2.8 Expected dividend yield — — — Risk-free interest rate (per annum) 2.7%-2.9% 1.68%-2.69% 0.66%-1.92% Expected forfeiture rate (post-vesting) — — — The Group estimated the risk-free rate based on the yield to maturity of U.S. treasury bonds denominated in USD at the option valuation date. The exercise multiple is estimated as the ratio of fair value of underlying shares over the exercise price as at the time the option is exercised, based on a consideration of empirical studies on the actual exercise behavior of employees. The expected volatility at the date of grant date and each option valuation date was estimated based on the historical stock prices of comparable companies. The Group has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. The following table sets forth the summary of option activities under the Company's 2013 Plan and 2014 Plan: Weighted Weighted Average Average Remaining Weighted Average Options Exercise Contractual Aggregate Intrinsic Grant Date Fair Outstanding Price Life Value Value US$ (In years) US$ RMB US$ RMB December 31, 2018 27,856,130 0.2124 6.84 7,491 51,507 0.5285 3.6335 Granted 3,272,000 0.2513 — — — 0.3293 2.2925 Exercised (5,001,660) 0.1244 — — — 0.4723 3.2877 Expired — — — — — — — Forfeited or cancelled (2,771,965) 0.3574 — — — 0.6901 4.8045 December 31, 2019 23,354,505 0.2194 6.14 10,165 70,769 0.4934 3.4351 Granted 2,149,975 0.6756 — — — 1.0778 7.0326 Exercised (5,103,015) 0.2887 — — — 0.6098 3.9786 Expired — — — — — — — Forfeited or cancelled (1,051,660) 0.5973 — — — 0.5776 3.7688 December 31, 2020 19,349,805 0.2313 5.40 30,495 198,983 0.5231 3.4132 Vested and expected to vest as of December 31, 2020 18,938,475 0.2273 5.19 29,924 195,254 0.5341 3.4850 Exercisable as of December 31, 2020 14,374,220 0.1477 4.12 23,856 155,662 0.4997 3.2604 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the estimated fair value of the underlying stock at each reporting date. 12 Share-based Compensation (Continued) RSUs The following table sets forth the summary of the restricted share units’ activities in 2019 and 2020: Number of Weighted Average RSUs Grant Date Fair Value US$ RMB December 31, 2018 8,051,639 0.79 5.44 Granted 4,245,970 0.51 3.55 Vested (2,938,710) 0.76 5.29 Forfeited (1,121,259) 0.70 4.87 December 31, 2019 8,237,640 0.66 4.59 Granted 3,110,895 1.17 7.63 Vested (3,673,275) 0.70 4.59 Forfeited (245,236) 0.55 3.58 December 31, 2020 7,430,024 0.86 5.59 |
Net income_(loss) per share
Net income/(loss) per share | 12 Months Ended |
Dec. 31, 2020 | |
Net income/(loss) per share | |
Net income/(loss) per share | 13 Net income/(loss) per share Basic net income/(loss) per share is computed using the weighted average number of the ordinary shares outstanding during the period. Diluted earnings per share (‘‘EPS’’) is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period under the treasury stock method. For the years ended December 31, 2018 and 2019, stock options to purchase ordinary shares and restricted share units that were anti-dilutive and excluded from the calculation of diluted net loss per share of the Company were 26,635,519, 27,421,502 on a weighted average basis, respectively. For the years ended December 31, 2020, as the Company is in a net profit position, stock options to purchase ordinary shares and restricted share units, unless they were anti-diluted, were included in the calculation of diluted net income per share of the Company. For the years ended December 31, 2020, stock options to purchase ordinary shares and restricted share units that were anti-dilutive and excluded from the calculation of diluted net income per share of the Company were 134,722 on a weighted average basis. The following table sets forth the computation of basic and diluted net loss per share for the periods indicate: For the year ended December 31, 2018 2019 2020 RMB RMB RMB Numerator: Net income/(loss) (416,694) (104,420) 146,962 Denominator: Weighted average ordinary shares outstanding —basic 304,542,400 308,364,918 319,553,690 —diluted 304,542,400 308,364,918 341,503,118 Basic net income/(loss) per share attributable to ordinary shareholders (1.37) (0.34) 0.46 Diluted net income/(loss) per share attributable to ordinary shareholders (1.37) (0.34) 0.43 Basic net income/(loss) per ADS attributable to ordinary shareholders (20.55) (5.08) 6.90 Diluted net income/(loss) per ADS attributable to ordinary shareholders (20.55) (5.08) 6.46 |
Fair value measurement
Fair value measurement | 12 Months Ended |
Dec. 31, 2020 | |
Fair value measurement | |
Fair value measurement | 14 Fair value measurement Assets measured at fair value on a recurring basis The following table sets forth financial instruments, measured at fair value on a recurring basis, by level within the fair value hierarchy, as of December 31, 2020: Fair value measurements at reporting date using Quoted Prices in Active Significant Markets Other Significant As of for Identical Observable Unobservable December 31, Assets Inputs Inputs Items 2020 (Level 1) (Level 2) (Level 3) Short-term investments 509,636 — 509,636 — The following table sets forth financial instruments, measured at fair value by level within the fair value hierarchy, as of December 31, 2019: Fair value measurements at reporting date using Quoted Prices in Active Significant Markets Other Significant As of for Identical Observable Unobservable December 31, Assets Inputs Inputs Items 2019 (Level 1) (Level 2) (Level 3) Short-term investments 452,936 — 452,936 — Short-term investments represent interest-bearing deposit placed with financial institution, which is restricted to withdrawal and use. The investment is issued by commercial bank in the PRC with a variable interest rate indexed to gold price published by the London Bullion Market Association and the exchange rate of euro against dollar. To estimate the fair value, the Group uses the expected return provided by the bank. As there are no quoted prices in active markets for the investment at the reporting date, the Group classifies the valuation techniques that use these inputs as Level 2 of fair value measurements. Financial instruments that are not measured at fair value, but fair value disclosure is required Financial assets and liabilities not measured at fair value, but fair value disclosure is required mainly include cash equivalent, time deposits and short-term loan. Cash equivalents’ fair values approximate their carrying values given their short maturities. Time deposits and short-term loan are measured at amortized cost. The carrying amount of time deposits as of December 31, 2019 and 2020, and the short-term loan as of December 31, 2019 approximate their fair value due to the fact that the related interest rates approximate the interest rates currently offered by financial institutions for similar instruments of comparable maturities. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and contingencies | |
Commitments and contingencies | 15 Commitments and contingencies a Commitments Future minimum payments under non-cancelable agreements for operating leases that have not commenced or with lease terms of 12 months or less consist of the following as of December 31, 2020: Less than One One to Three Over Three Total Year Years Years RMB RMB RMB RMB Operating lease commitments 1,198 696 274 228 Upon the adoption of ASC 842 on January 1, 2019, future minimum lease payments for operating lease liabilities as of December 31, 2020 are disclosed in Note 7. Purchase commitments mainly include minimum commitments for non-cancellable advertising service contracts. Purchase commitments as of December 31, 2020 were as follows: Less than One Over One Total Year Year RMB RMB RMB Purchase commitments 239,226 226,853 12,373 b Contingencies There are no claims, lawsuits, investigations and proceedings, including un-asserted claims that are probable to be assessed, that have in the recent past had, or to the Group’s knowledge, are reasonably possible to have, a material change on the Group’s financial position results of operations or cash flow. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related party transactions | |
Related party transactions | 16 Related party transactions Beijing Dasheng Time Technology Co., Ltd In August 2014, Beijing Dasheng Time Technology Co., Ltd (“Dasheng Time”) was incorporated by Shu Ting. Shu Ting is the Group’s co-founder and has served as director and senior vice president. Since November 2019, Dasheng Zhixing entered into a promotion channel service with Dasheng Time. Under the cooperation, Dasheng Zhixing provides online lessons of Dasheng Time to the student who has purchased the prepaid credit packages of the Group, as a promotion channel to Dasheng Time. For the years ended 2019 and 2020, the fair value of promotion service provided by Dasheng Zhixing is estimated to be RMB535 and RMB76, which are recognized as net revenues in the consolidated statement of comprehensive income/(loss) of the Group. |
Profit appropriation and restri
Profit appropriation and restricted net assets | 12 Months Ended |
Dec. 31, 2020 | |
Profit appropriation and restricted net assets | |
Profit appropriation and restricted net assets | 17 Profit appropriation and restricted net assets PRC laws and regulations permit payments of dividends by the subsidiaries and the VIEs incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, each of the Company’s subsidiary, VIE and VIE’s subsidiary is required to annually appropriate 10% of net after-tax income to the statutory general reserve fund (Note 2(aa)) prior to payment of any dividends, unless such reserve funds have reached 50% of its respective registered capital. As a result of these and other restrictions under PRC laws and regulations, the Company’s PRC subsidiary and consolidated VIEs are restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances of the Group’s total consolidated net assets. Total registered capital of the Company’s PRC subsidiary and consolidated VIEs as of December 31, 2019 and 2020 were RMB140,008 and RMB378,014, respectively. Parent Company Only Condensed Financial Information The Company performed a test on the restricted net assets of its consolidated subsidiaries and VIEs in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08(e)(3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial information for the Company only. For the purposes of presenting parent only financial information, the Company records its investments in its subsidiaries and VIEs under the equity method of accounting. Such investments are presented on the separate condensed balance sheets of the Company as “Deficit of investments in subsidiaries and VIEs”, and shares in the subsidiaries and VIEs’ loss are presented as “Share of income/(loss) of subsidiaries and VIEs” in the condensed statements of comprehensive income/(loss). The parent company only condensed financial information should be read in conjunction with the Group’ consolidated financial statements. The subsidiaries did not pay any dividends to the Company for the years presented. Certain information and footnote disclosures generally included in financial statements prepared in accordance with US GAAP have been condensed and omitted. The footnote disclosures represent supplemental information relating to the operations of the Company, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Group. The Company did not have significant capital and other commitments, or guarantees as of December 31, 2019 and 2020. The Company’s accounting policies are the same as the Group's policies except for the accounting for the investments in subsidiaries and VIEs. 17 Profit appropriation and restricted net assets (Continued) Condensed Balance Sheets As of December, 31 2019 2020 2020 RMB RMB US$ (Note 2(e)) ASSETS Current assets Cash and cash equivalents 6,967 15,077 2,311 Time deposits 48,748 153,614 23,542 Prepaid expenses and other current assets 3,343 8,684 1,331 Amounts due from inter-company entities 498,925 466,649 71,517 Total current assets 557,983 644,024 98,701 Non-current assets Time deposits 113,415 2,000 307 Other non-current assets — 486 74 Total non-current assets 113,415 2,486 381 Total assets 671,398 646,510 99,082 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities Accrued expenses and other current liabilities 7,585 6,533 1,001 Amounts due to inter-company entities 13,828 14,029 2,150 Tax payables 91 548 84 Total current liabilities 21,504 21,110 3,235 Non-current liabilities Deficit of investments in subsidiaries and VIEs 1,696,552 1,492,338 228,712 Total non-current liabilities 1,696,552 1,492,338 228,712 Total liabilities 1,718,056 1,513,448 231,947 Shareholders’ deficit: Ordinary shares 205 213 33 Treasury stock (6,011) (23,109) (3,542) Additional paid-in capital 1,128,079 1,199,014 183,757 Accumulated other comprehensive income 29,971 8,884 1,361 Accumulated deficit (2,198,902) (2,051,940) (314,474) Total shareholders’ deficit (1,046,658) (866,938) (132,865) Total liabilities and shareholders’ deficit 671,398 646,510 99,082 17 Profit appropriation and restricted net assets (Continued) Condensed Statements of Operations and Comprehensive Income/(Loss) For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 2(e)) Operating expenses: Product development expenses — — — — General and administrative expenses (14,148) (11,714) (16,559) (2,538) Share of income/(loss) of subsidiaries and VIEs (397,991) (97,293) 155,100 23,770 Total operating expenses (412,139) (109,007) 138,541 21,232 Income/(Loss) from operations (412,139) (109,007) 138,541 21,232 Impairment loss (7,364) — — — Interest income 5,406 5,614 6,149 942 Interest expenses and other expense, net (2,597) (517) 2,763 423 Income/(Loss) before income tax expenses (416,694) (103,910) 147,453 22,597 Income tax expenses — (510) (491) (74) Net income/(loss), all attributable to the Company’s ordinary shareholders (416,694) (104,420) 146,962 22,523 Comprehensive income/(loss): Net income/(loss) (416,694) (104,420) 146,962 22,523 Other comprehensive income/(loss) Foreign currency translation adjustments 16,939 5,356 (21,087) (3,232) Total comprehensive income/(loss) (399,755) (99,064) 125,875 19,291 Condensed Statements of Cash Flow For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 2(e)) Cash flows from operating activities: Net cash used in operating activities (3,836) (6,718) (14,977) (2,295) Cash flows from investing activities: Placement of time deposits (224,586) (167,164) (49,734) (7,622) Withdrawal of time deposits 246,326 169,412 48,635 7,454 Investment in subsidiaries (68,755) — — — Net cash provided by/(used in) investing activities (47,015) 2,248 (1,099) (168) Cash flows from financing activities: Share repurchase program — (6,011) (23,116) (3,543) Proceeds from exercise of stock options 1,611 4,334 10,330 1,583 Proceeds from issuance of stocks, net of offering expenses — — 39,942 6,121 Net cash provided by/(used in) financing activities 1,611 (1,677) 27,156 4,161 Effect of exchange rate changes on cash and cash equivalents 775 114 (2,970) (455) Net increase/(decrease) in cash and cash equivalents (48,465) (6,033) 8,110 1,243 Cash and cash equivalents at the beginning of the year 61,465 13,000 6,967 1,068 Cash and cash equivalents at the end of the year 13,000 6,967 15,077 2,311 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2020 | |
Segment Information | |
Segment Information | 18 Segment Information Based on the criteria established by ASC 280 ‘‘Segment Reporting’’, the Group’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group. Operating segments are defined as components of an enterprise engaging in businesses activities for which separate financial information is available that is regularly evaluated by the Group’s CODM in deciding how to allocate resources and assess performance. The Group operated and managed its business in two segments, one-on-one offerings, and small class offerings. Information regarding the two segments provided to the Group’s CODM is at the operating income/(loss) level. The Group currently does not allocate assets and liabilities, non-operating income/ (expenses), income tax expenses to its segments, as its CODM does not use such information to allocate resources or evaluate the performance of the two operating segments. The Group presents segmental information after elimination of inter-company transactions. In general, revenue, cost of revenue and operating expenses are directly attributable, and are allocated, to each segment. The Group allocates costs and expenses that are not directly attributable to individual segments, such as those that support infrastructure across different operating segments, to the segments mainly on the basis of usage, revenue or headcount, depending on the nature of the relevant costs and expenses. 18 Segment Information (Continued) The following table presents summary information by segment: For the year ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 2(e)) Net revenues One-on-one offerings 1,044,769 1,365,706 1,957,013 299,925 Small class offerings 100,748 112,787 97,082 14,879 Total net revenues 1,145,517 1,478,493 2,054,095 314,804 Cost of revenues One-on-one offerings (342,927) (386,085) (540,707) (82,867) Small class offerings (67,981) (53,838) (39,710) (6,086) Total cost of revenues (410,908) (439,923) (580,417) (88,953) Gross profit One-on-one offerings 701,842 979,621 1,416,306 217,058 Small class offerings 32,767 58,949 57,372 8,793 Total gross profit 734,609 1,038,570 1,473,678 225,851 Gross profit margin One-on-one offerings 67.2 % 71.7 % 72.4 % 72.4 % Small class offerings 32.5 % 52.3 % 59.1 % 59.1 % Total gross profit margin 64.1 % 70.2 % 71.7 % 71.7 % Sales and marketing expenses One-on-one offerings (647,314) (738,010) (991,479) (151,951) Small class offerings (83,919) (54,581) (44,141) (6,765) Total sales and marketing expenses (731,233) (792,591) (1,035,620) (158,716) Product development expenses One-on-one offerings (139,240) (138,291) (150,926) (23,131) Small class offerings (45,760) (19,214) (11,903) (1,824) Total product development expenses (185,000) (157,505) (162,829) (24,955) General and administrative expenses One-on-one offerings (186,983) (178,606) (202,955) (31,104) Small class offerings (36,074) (17,423) (11,269) (1,727) Total general and administrative expenses (223,057) (196,029) (214,224) (32,831) Operating expenses One-on-one offerings (973,537) (1,054,907) (1,345,360) (206,186) Small class offerings (165,753) (91,218) (67,313) (10,316) Total operating expenses (1,139,290) (1,146,125) (1,412,673) (216,502) Other income One-on-one offerings — — 38,683 5,928 Small class offerings — — 4,731 725 Total other income — — 43,414 6,653 Income/(loss) from operations One-on-one offerings (271,695) (75,286) 109,629 16,800 Small class offerings (132,986) (32,269) (5,210) (798) Total income/(loss) from operations (404,681) (107,555) 104,419 16,002 18 Segment Information (Continued) The Group operates in two principal geographical areas—China and the Philippines. For all periods presented, all revenues from external customers are attributed to China based on customer location. The following table summarizes property and equipment of the Group by geographical location: Property and equipment As of December 31, 2019 2020 RMB RMB China 16,446 18,284 Philippines 3,890 2,891 |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent events | |
Subsequent events | 19 Subsequent events The Group performed an evaluation of subsequent events through April 7, 2021, which is the date the financial statements were issued, and did not identify any material events or transactions that would require adjustment to or disclosure in the financial statements. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Significant Accounting Policies | |
Basis of presentation | a Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below. |
Principles of consolidation | b Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and consolidated VIEs for which the Company is the primary beneficiary. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significant impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All transactions and balances among the Company, its subsidiaries and consolidated VIEs have been eliminated upon consolidation. |
Use of estimates | c Use of estimates The preparation of the Group’s consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of standalone selling prices of performance obligations that have never been separately sold, estimate of prepaid credit breakage, assessment for the impairment of long-lived assets, the valuation allowance of deferred tax assets, and the valuation and recognition of share-based compensation. |
Functional currency and foreign currency translation | d Functional currency and foreign currency translation The Group uses Renminbi (‘‘RMB’’) as its reporting currency. The functional currency of the Company and its overseas subsidiaries incorporated in the Cayman Islands and Hong Kong is United States dollars (‘‘US$’’), and the functional currency of the Philippines entities is Peso (‘‘PHP’’). The functional currency of the PRC entities in the Group is RMB. In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC has been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the reporting period. Translation adjustments are reported as foreign currency translation adjustments, and are shown as a component of other comprehensive income in the consolidated statements of comprehensive income/(loss). Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in interest expenses and other expense, net. |
Convenience Translation | 2 e Convenience Translation Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive income/(loss) and statements of cash flows from RMB into US$ as of and for the year ended December 31, 2020 are solely for the convenience of the readers and were calculated at the rate of US$1.00 = RMB6.5250, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Board on December 31, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2020, or at any other rate. |
Fair value measurements | f Fair value measurements Financial instruments Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value: ● Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. ● Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. ● Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Group’s financial instruments include cash and cash equivalents, time deposits, short-term investment, short-term loan, other current assets, accrued expenses and tax payable. The carrying amounts of the short-term financial instruments approximate their fair value due to their relatively short maturity. The carrying amount of the short-term loan approximates its fair value due to the fact that the related interest rate approximates the interest rates currently offered by financial institutions for similar debt instruments of comparable maturities. |
Cash and cash equivalents | g Cash and cash equivalents The Group considers all highly liquid investments, which are unrestricted as to withdrawal or use, with original maturities of three months or less as cash equivalents. As of December 31, 2019 and 2020, the Group had total balance of RMB18,715 and RMB17,933 respectively, held in accounts managed by WeChat Pay, Alipay, China Merchants Bank Aggregate Paying Platform and 99bill in connection with the collection of tuition fees online, which have been classified as cash and cash equivalents on the consolidated balance sheets. |
Time deposits | 2 h Time deposits Time deposits in the current assets represent demand deposits placed with banks with original maturities of more than three months but less than one year. For the time deposits in the non-current assets, the maturities are more than one year. Interest earned is recorded as interest income in the consolidated statements of comprehensive income/(loss) during the periods. |
Short-term investments | i Short-term investments Short-term investments include investments in financial instruments with a variable interest rate indexed to Shanghai Interbank Offered Rate (or “SHIBOR”), the gold price published by the London Bullion Market Association, the exchange rate of euro against dollar, or performance of underlying assets and investments, all of which are with original maturities of less than 12 months. |
Held-to-maturity security | j Held-to-maturity security A held-to-maturity investment is a non-derivative financial asset that has either fixed or determinable payments and a fixed maturity, and for which an entity has both the ability and the intention to hold to maturity. This type of investment is reported at amortized cost and the difference between the maturity value and the cost of the investments is amortized to the income statement and recognized as interest income over the life of the investments. The Group assesses whether an investment is impaired at the individual security level in each reporting period. A held-to-maturity investment is impaired if the fair value of the investment is less than its cost. If an investment is concluded to be impaired, the Group determines whether such impairment is other-than-temporary. Factors the Group consider making such determination include the duration and severity of the impairment, the reason for the decline in value and the potential recovery period and the Group’s intent to sell. If any impairment is considered other-than-temporary, the Group will write down the asset to its fair value and record the corresponding charge as impairment loss in the statement of consolidated comprehensive income/ (loss). |
Expected credit losses | k Expected credit losses In 2016, the FASB issued ASC Topic 326, which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses. The Group adopted this ASC Topic 326 and several associated ASUs on January 1, 2020 , and it did not have a material impact in retained earnings (accumulated deficit). The Group’s other receivables classified as prepaid expenses and other current assets and other non-current assets are within the scope of ASC Topic 326. The Group has identified the relevant risk characteristics of other receivables which include size, type of the services or the products the Group provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the life-time expected credit losses. Additionally, external data and macroeconomic factors are also considered. This is assessed at each quarter based on the Group’s specific facts and circumstances. No allowance was made for the receivables for the year ended December 31, 2020. |
Long-lived assets | 2 l Long-lived assets Property and equipment Property and equipment are stated at cost less accumulated depreciation, amortization and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally from three years for computers and equipment, four years for vehicles and five years for furniture and fixtures. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the remaining lease term. Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of property and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the consolidated statements of comprehensive income/(loss). Intangible assets Intangible assets mainly comprise of software, copyrights and trademarks. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization is computed using the straight-line method over the estimated useful lives of the intangible assets, generally ten years for trademarks and major accounting and ERP software, three years for other software, and three Goodwill Goodwill represents the excess of the purchase price over the fair value of the identifiable assets and liabilities of 91waijiao.com Goodwill is not depreciated or amortized but is tested for impairment at the reporting unit level on an annual basis every December 31, and in between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. The Group first has the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. For those reporting units where it is determined that it is more likely than not that their fair values are less than the units’ carrying amounts, the fair value of a reporting unit is compared to its carrying value. If the carrying value of the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference. The Group as a whole, including acquired 91waijiao.com, is determined to be two reporting units for goodwill impairment testing, the one-on-one offerings and the small class offerings. The Group assessed goodwill for impairment in accordance with ASC 2017-04, "Simplifying the Test for Goodwill impairment", which removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment charge will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. No goodwill impairment was recognizing of goodwill for the year ended 2018, 2019 and 2020. 2 Impairment of long-lived assets Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significantly adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment charge was recognized for any of the periods presented. |
Revenue recognition | m Revenue recognition Revenues of the Group are generated from providing online English language education services, delivered using learning materials and textbook. Students purchase the services by subscribing to prepaid credit packages or prepaid membership packages directly from the Group or through authorized distribution agents. Tuition is generally paid in advance and is initially recorded as advances from students. The Group adopted ASC 606 "Revenue from Contracts with Customers" on January 1, 2018, using the modified retrospective method. In according with ASC 606, revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those services. The Group is responsible for course design, teacher sourcing and training, development and maintenance of online platform and system, and is the party primarily responsible for fulfilling the promise to provide the services to customers and it has full discretion in establishing the prices for the services provided to customers. Hence, the Group is the principal for providing the online English education services to customers. Therefore, the Group recognizes revenue on a gross basis. The Group allows refund of fees corresponding to any remaining undelivered services when customers withdraw contracts with the Group within a certain period after the purchase. Refunds are recorded as reductions of the advances from students and true up adjustments were made on the recognized revenue of the contracts. 2 Prepaid credit packages Prepaid credit packages for one-on-one lessons typically contain 20 to 720 lesson credits with validity periods from 3 months to 60 months. The students can book lessons within the validity period. Prepaid credit packages for small class lessons typically range from approximately one Certain prepaid credit packages contain a combination of credits for one-on-one lesson, group lessons and learning materials, or a combination of credits for small class lessons from foreign teachers and Chinese teachers. Revenue from prepaid credit packages is recognized when the lesson credit is taken, and revenue from learning materials is recognized when learning materials are made available to students. Actual usage is tracked on a contract-by-contract basis. At each reporting date, the Group estimates losses, or forfeiture of prepaid credits. Based on the Group’s analysis of historical customer forfeitures of prepaid credits, the Group has concluded that no losses should be recognized for the year 2019 and 2020. For prepaid credit packages that contain a combination of lessons, learning materials and textbooks, each lesson and learning materials in each packages are a separate performance obligation, as customers can benefit from each lesson and learning materials on its own, and the Group’s promise to deliver each lesson and learning materials to the customer is separately identifiable from other promises in the contract. Package consideration is allocated to each performance obligation at contract inception based on standalone selling price of each performance obligation. For lessons that have never been sold on a standalone basis, the Group estimates their standalone selling price based on cost plus an expected margin. Because the validity period of packages is up to 60 months and because of the practice of upfront cash collection, payment by customers could occur significantly before performance. However, the timing of the transfer of related services is at the discretion of the customers. Therefore, the Group does not recognize any financing component in the determination of revenue from the sale of prepaid credit packages. Learning materials Beginning in 2019, the Group provides the learning materials to the students. Learning materials typically contain two hundred online audio picture books to the K-12 students or twenty-six recorded lessons to adult students. The students can download, read and watch the learning materials in the applications of the Group. The learning materials, included in the prepaid credit packages, are recognized as revenues when it is available for students to access. The Group estimates the standalone selling price of learning materials by reference to the standalone selling price of same type of learning materials in the market. Textbook The student, who has purchased the prepaid credit packages, can exchange the physical textbook with 3 one-on-one lessons for the K-12 Philippine prepaid credit packages. The revenue is recognized when the textbook is delivered. 2 Prepaid membership packages The Group previously sold prepaid membership packages, which ranged from 3 months to 36 months. Students were able to book one lesson per day within their membership period and the package subscription fees were paid in advance. The Group ceased the sale of such prepaid membership packages since 2017. Revenue from the remaining life of previously sold prepaid membership packages was recognized on a straight-line basis over the remaining membership period. The Group elects not to adjust the effects of a significant financing component for prepaid membership package with duration of one year The Group offers free-trial lessons to students upon registration. Students are not obligated to subscribe any course packages with the Group to obtain the free-trial lessons. The Group records the cost incurred in providing the free-trial lessons as sales and marketing expenses when the lesson is booked and taken by the students. Revenue Disaggregation The following table presents the Group’s revenues disaggregated by timing of transfer of services: For the year ended, For the year ended, For the year ended, December 31, 2018 December 31, 2019 December 31, 2020 RMB RMB RMB RMB RMB RMB RMB RMB RMB One-on-one Small class One-on-one Small class One-on-one Small class offerings offerings Total offerings offerings Total offerings offerings Total Revenues from prepaid credit packages 1,013,803 100,748 1,114,551 1,351,405 112,787 1,464,192 1,950,932 97,082 2,048,014 —credits for lessons 1,013,803 100,748 1,114,551 1,247,401 112,787 1,360,188 1,766,183 95,282 1,861,465 —credits for learning materials — — — 101,248 — 101,248 164,494 1,800 166,294 — physical textbook and learning machine — — — 2,756 — 2,756 20,255 — 20,255 Revenues from prepaid membership packages 30,966 — 30,966 14,301 — 14,301 6,081 — 6,081 Total revenues 1,044,769 100,748 1,145,517 1,365,706 112,787 1,478,493 1,957,013 97,082 2,054,095 Contract balances Contract cost Incremental costs of obtaining a contract with a customer is recognized as an asset in “Prepaid expenses and other current assets” if the Group expects to recover those costs. Incremental costs of obtaining a contract mainly include sales commissions to sales personnel and distribution agents, as well as certain cash incentives for customers who provide referrals service for the group. Contract cost assets are amortized on the basis consistent with the pattern of the transfer of services to which the assets relate. As of December 31, 2020, the balance of capitalized costs of obtaining contracts with customers was RMB199,873. For the year ended December 31, 2018, 2019 and 2020, the Group recognized amortization of RMB86,394, RMB142,772 and RMB182,134 respectively as “Sales and marketing expenses” in its consolidated statements of comprehensive income/(loss). No impairment of contract cost assets was recognized for the years ended December 31, 2018, 2019 and 2020. 2 Contract liability Contract liability is related to the payments received by the Group in advance from customers representing the Group’s obligations to perform services or transfer learning materials to customers. The Group generally receives contract payments in advance and records the consideration as advances from students. Given that the Group permits refund of fees corresponding to remaining undelivered services when customers withdraw contracts with the Group within certain period after the purchase, contract liability does not include the amounts that may be refunded in the future if customers withdraw for any remaining undelivered lessons. Refund liability is estimated based on the historical refund data and the length of remaining period customers are eligible for refund for each contract at the end of each reporting period. As of December 31, 2018 December 31, 2019 December 31, 2020 RMB RMB RMB Contract liability 1,559,875 2,029,872 2,529,915 Future output VAT associated with contract liability 93,593 121,887 151,795 Refund liability 22,653 24,255 35,407 Deposits from students 8,670 10,577 3,929 Advances from students 1,684,791 2,186,591 2,721,046 The additions to the contract liability balance were primarily due to cash collections received in advance of gaining performance obligations, while the reductions to the contract liability balance were primarily due to the recognition of revenues upon fulfillment of performance obligations, as well as refund of fees corresponding to any remaining undelivered services when customers withdraw contracts with the Group within certain period after the purchase, all of which were in the ordinary course of business. RMB1,165,093 of revenues recognized in year ended December 31, 2020 was included in the contract liability balance as of January 1, 2020. No revenue was recognized in the year ended December 31, 2020 from performance obligations satisfied (or partially satisfied) in previous periods. As of December 31, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations is RMB2,529,915. These revenues will be recognized is at the discretion of customers. The Group expects to recognize substantially all of this balance as revenue over the next 12 to 18 months, and the remainder thereafter. |
Cost of revenues | n Cost of revenues Cost of revenues primarily includes service expenses involved in the delivery of paid courses and payment processing fees paid to payment channels for processing the payments from students, as these components are necessary to obtain the net revenues. These costs are expensed as incurred except for payment processing fees associated with advances from students, which are recognized in the period in which the related revenues are recognized. The indirect cost of server, bandwidth and printing of textbooks is expensed as incurred. The cost of license is computed using the straight-line method over the contract term of copyrights, generally five years for Highlights. The license of Highlights is used for the online audio picture books in the learning materials. |
Product development expenses | o Product development expenses Product development expenses consist primarily of payroll-related expenses incurred for the innovation of course content, as well as the development and enhancement to the Group’s websites and platforms of applications. The Group expenses all costs incurred for the planning and post implementation phases of development and costs associated with repair or maintenance of the existing platform. Since the inception, the amount of costs qualifying for capitalization has been immaterial and, as a result, all development costs have been expensed as incurred. |
Sales and marketing expenses | 2 p Sales and marketing expenses Sales and marketing expenses consist primarily of marketing and promotional expenses, salaries and benefits expenses related to the Group’s sales and marketing personnel and office rental, depreciation and other expenses related to the Group’s sales and marketing team. Starting from January 1, 2018, the Group capitalizes incremental cost to obtain contracts with customers, including sales commissions to sales personnel and distribution agents, as well as certain cash incentive for customer. Amortization of related contract cost assets is recognized as sales and marketing expenses. Advertising expenses consist primarily of costs for the promotion of corporate image and product marketing. The Group expenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. For the years ended December 31, 2018, 2019 and 2020, the advertising expenses were RMB285,005, RMB281,076 and RMB372,291, respectively. |
Operating leases | q Operating leases The Group adopted the new accounting standard update on leases from January 1, 2019. The Group has operating leases primarily for office space. The determination of whether an arrangement is a lease or contains a lease is made at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Group obtains substantially all of the economic benefits from and has the ability to direct the use of the asset. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the Group’s operating leases, the Group generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating right of use assets are generally recognized based on the amount of the initial measurement of the lease liability. The Group’s leases have remaining lease terms of up to five years. Lease expense is recognized on a straight-line basis over the lease term. Operating leases are included in operating lease right of use assets, short-term lease liabilities and long-term liabilities on the Group’s consolidated balance sheets. The Group has no financial leases for any of the periods presented. The Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less. Rental expenses incurred were RMB35,060, RMB42,468 and RMB46,948 for the years ended December 31, 2018, 2019 and 2020, respectively. |
Share-based compensation | 2 r Share-based compensation The Group accounts for share-based awards granted to employees in accordance with ASC 718. In accordance with the guidance, the Group determines whether a share-based award should be classified and accounted for as a liability award or equity award. For options granted to employees, the related share-based compensation expense is recognized in the financial statements based on their grant date fair values, which are calculated using the binomial option pricing model. The binomial option pricing model requires a number of complex assumptions. The determination of the fair value is affected by the share price as well as assumptions regarding a number of complex and subjective variables, including the expected share price volatility, actual and projected employee share option exercise behavior, risk-free interest rates and expected dividends. Share-based compensation expense is recorded net of estimated forfeitures, such that expenses are recorded only for those share-based awards that are expected to ultimately vest. In April 2018, FASB issued ASU 2018-07, which amended ASC 718 to apply to most aspects of awards issued to nonemployees. ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Group adopted ASU 2018-07 for share-based awards to non-employees in December 31, 2019 when the awards are within the scope of ASC 718. The forfeiture rate is the estimated annual rate at which unvested awards will be forfeited during the next year, which differs significantly by employee group. For directors and executive officers, the forfeiture rate is estimated to be zero because the possibility of their termination is remote. For employees, the forfeitures of stock options are estimated by historical actual forfeitures due to grantees’ termination prior to vesting, and the forfeiture rate will be adjusted over the requisite service period to the extent that actual forfeiture rate differs, or is expected to differ from such estimates. Changes in the estimated forfeiture rate will be recognized through a cumulative catch-up adjustment in the period of change. Share-based compensation expenses were allocated to operating expenses as follows: For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ Sales and marketing expenses (5,676) (2,951) (8,835) (1,354) Product development expenses (7,396) (3,472) (4,477) (686) General and administrative expenses (14,814) (10,309) (13,422) (2,057) Total (27,886) (16,732) (26,734) (4,097) |
Employee benefits | s Employee benefits PRC Contribution Plan Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary and consolidated VIEs of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefit expenses, which were expensed as incurred, were approximately RMB54,732, RMB68,088 and RMB57,216 for the years ended December 31, 2018, 2019, and 2020, respectively. As part of Chinese government's effort to ease the burden of businesses affected by the coronavirus (COVID-19) outbreak, the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration temporarily reduced and exempted employer obligation on social security contributions from February 2020 till the end of 2020. The impact of coronavirus policies on cost of revenues was RMB1,250, sales and marketing expenses was RMB21,127, product development expenses was RMB5,976 and general and administrative expenses was RMB4,773 for the year ended December 31, 2020. 2 Philippine Contribution Plan and Employee Benefit Plan The Company’s subsidiary and VIE in the Philippines participate in government mandated, multiemployer, defined contribution plans, including Social Security System (''SSS Benefits''), Home Development Mutual Fund (''Pag-IBIG Fund'') and Philippine Health Insurance Corporation (‘‘Phil-Health’’). Pursuance to these plans certain retirement, medical and housing benefits are provided to full-time employees. Obligations for contributions to these defined contribution plans are recognized as expenses in the consolidated statements of comprehensive income/(loss) as incurred. The total amounts for such employee benefits were RMB3,107, RMB3,281 and RMB3,650 for the years ended December 31, 2018, 2019 and 2020, respectively. In addition, the Company’s subsidiaries and VIE in the Philippines also participate in a defined benefits plan, which was unfunded as of December 31, 2020. The liability recognized in the consolidated balance sheets in respect of defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period. Changes in the present value of the defined benefit obligation are included in operating expenses in the consolidated statements of comprehensive income/(loss). The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The total liabilities for such employee benefits were RMB1,595 and as of |
Other Income | t Other Income As part of Chinese government's effort to ease the burden of businesses affected by the coronavirus (COVID-19) outbreak, the State Taxation Administration exempted a wide range of consumer services from value added tax (VAT) from January 2020. The income obtained by taxpayers from providing essential services shall be exempt from VAT. The favorable impact of coronavirus relief policies was RMB 32,342 for the year ended December 31, 2020. On September 30, 2019, Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, the taxpayers engaging in the provision of essential services are allowed to deduct an extra 15% of the deductible input tax for the current period from the payable tax. The impact of the policy of additional value-added tax credit for the income generated by the essential services provided by enterprises were nil and RMB 11,072 for the years ended December 31, 2019 and 2020. |
Taxation | u Taxation Income taxes Current income taxes are provided on the basis of income/ (loss) for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are provided using the liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statement of comprehensive income/(loss) in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized. 2 Uncertain tax positions In order to assess uncertain tax positions, the Group applies a more likely than not threshold and a two-step approach for the tax position measurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Group recognizes interest and penalties, if any, under accrued expenses and other current liabilities on its consolidated balance sheet and under other expenses in its consolidated statement of comprehensive income/(loss). The Group did not have any significant unrecognized benefits relating to uncertain tax positions as of and for the years ended December 31, 2018, 2019 and 2020. |
Related parties | v Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation. |
Income/(loss) per share | w Income/(loss) per share Income/(loss) per share is computed in accordance with ASC 260, Earnings per Share Basic net income/(loss) per share is computed using the weighted average number of ordinary shares outstanding during the period. Options and unvested restricted share units are not considered outstanding in computation of basic earnings per share. Diluted net income/(loss) per share is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period under treasury stock method. Potential ordinary shares include options to purchase ordinary shares and unvested restricted share units, unless they were anti-dilutive. The computation of diluted net income/(loss) per share does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect (i.e. an increase in earnings per share amounts or a decrease in income/(loss) per share amounts) on net income/(loss) per share. |
Comprehensive income/(loss) | x Comprehensive income / (loss) Comprehensive income/ (loss) is defined to include all changes in equity/ (deficit) of the Group during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Other comprehensive income/(loss), as presented on the accompanying consolidated statements of comprehensive income/(loss), consists of accumulated foreign currency translation adjustments. |
Treasury stock | y Treasury stock In 2019, the Company repurchased an aggregate of 120,448 ADSs for US$852.4 in the open market under this program, at an average price of US$7.08 per ADS. In 2020, the Company repurchased an aggregate of 100 ADSs for US$1.0 in the open market under this program, at an average price of US$9.50 per ADS. As of the July 31, 2020, all repurchased shares were used as share-based awards granted to employees, the Group wrote off the treasury stock and accounted for additional paid-in capital. The repurchased shares were accounted for under the cost method and presented as "treasury stock" in equity on the Group's consolidated balance sheets. |
Segment reporting | 2 z Segment reporting Operating segments are defined as components of an enterprise engaging in businesses activities for which separate financial information is available that is regularly evaluated by the Group’s CODM in deciding how to allocate resources and assess performance. The Group’s internal organizational structure as well as information about geographical areas and business segments is more fully described in Note 18. |
Statutory reserves | aa Statutory reserves In accordance with China’s Company Laws, the Company’s consolidated VIEs in PRC must make appropriations from their after-tax profit (as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People’s Republic of China (''PRC GAAP'')) to non-distributable reserve funds including (i) statutory surplus fund and (ii) discretionary surplus fund. The appropriation to the statutory surplus fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the respective company. Appropriation to the discretionary surplus fund is made at the discretion of the respective company. Pursuant to the laws applicable to China’s Foreign Investment Enterprises, the Company’s subsidiary that is a foreign investment enterprise in China have to make appropriations from its after-tax profit (as determined under PRC GAAP) to reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50 % of the registered capital of the respective company. Appropriations to the other two reserve funds are at the respective companies’ discretion. |
Recently issued accounting pronouncements | ab Recently issued accounting pronouncements In December 2019, the FASB issued a new accounting standard update to simplify the accounting for income taxes. The new guidance removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures. |
Government subsidy | ac Government subsidy VAT collected from customers is excluded from reported revenue. As part of Chinese government’s effort to ease the burden of businesses affected by the coronavirus (COVID-19) outbreak, the Ministry of Finance and the Chinese State Taxation Administration (“STA”) jointly announced on February 6, 2020 that paying output VAT related to specific consumer services could be waived, effective from January 2020. Companies with eligible revenues can voluntarily elect to take advantage of this policy, which has been announced as temporary in nature (although an end date has not yet been communicated by the STA). In connection with this election, the allowable offset of input VAT is suspended, reducing the benefit to the Group to the net amount that it would ordinarily remit to the authorities. The Group did not adjust prices charged to end customers. Although the amounts paid by customers since January 2020 included amounts that have historically related to VAT, the Group has determined these collections from customers should continue to be excluded from revenue. The Group’s interpretation of the policy is that it is a temporary waiver of amounts due to the government, for the express purpose of mitigating the economic impact of the pandemic, and not an increase in the selling price of the Group’s services. 2 The amounts collected from customers and excluded from revenue for the year of 2020 were RMB108,725, offset by input VAT of RMB76,383. The net amount of RMB32,342 was recognized as a government subsidy in other income in the consolidated statements of comprehensive income. As part of Chinese government’s effort to ease the burden of businesses affected by the coronavirus (COVID-19), the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration temporarily reduced and exempted employer obligation on social security contributions from February 2020. The impact of coronavirus policies on employee benefit expenses was RMB33,126 for the year ended December 31, 2020, reducing the personnel expenses in the cost of revenue, sales and marketing expenses, product development expenses and general and administrative expenses. On the September 30, 2019, Ministry of Finance and the State Taxation Administration announced that from October 1, 2019 to December 31, 2021, a taxpayer engaging in the provision of essential services is allowed to credit the amount of input tax deductible in the current period plus 15% thereof against the amount of taxes payable. The impact of the policy of additional value-added tax credit for the income generated by the essential services provided by enterprises was RMBnil and RMB11,072 for the years ended December 31, 2019 and 2020 respectively. And it has been recognized as other income of the operating income in the consolidated statements of comprehensive income/(loss). |
Operations and Reorganization (
Operations and Reorganization (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Operations and Reorganization | |
Schedule of the Company's subsidiaries and VIEs and VIEs and VIES' subsidiaries | Percentage of Place of Date of Direct or Indirect Incorporation/ Incorporation/ Economic Company Establishment Establishment Ownership Subsidiaries China Online Education (HK) Limited Hong Kong April 1, 2013 100 % 51Talk English International Limited Hong Kong October 7, 2014 100 % China Online Innovations Inc.* Philippines October 9, 2014 99.999993 % On Demand English Innovations Inc.* Philippines January 14, 2016 99.999 % Beijing Dasheng Online Technology Co., Ltd. PRC June 4, 2013 100 % Helloworld Online Education Group Cayman July 13, 2018 100 % Helloworld Online Education Group (HK) Limited Hong Kong August 10, 2018 100 % Beijing Helloworld Online Technology Co., Ltd. PRC September 3, 2018 100 % TESOL Academy Online Limited Hong Kong February 25, 2019 100 % VIEs and VIES' subsidiaries Beijing Dasheng Zhixing Technology Co., Ltd PRC July 8, 2011 100 % 51Talk English Philippines Corporation Philippines August 3, 2012 100 % Shanghai Zhishi Education Training Co., Ltd PRC December 30, 2016 100 % Wuhan Houdezaiwu Online Technology Co., Ltd PRC January 12, 2017 100 % Beijing Dasheng Helloworld Technology Co., Ltd. PRC July 9, 2018 100 % Shenzhen Dasheng Zhiyun Technology Co., Ltd. PRC July 17, 2019 100 % * The Company directly holds the 99.999993% and 99.999% shares of China Online Innovations Inc. and On Demand English Innovations Inc. respectively. There is no substantive non-controlling interest for China Online Innovations Inc. and On Demand English Innovations Inc. as of December 31, 2019 and 2020. The non-controlling shareholders are nominee shareholders mainly consisting of local residents to comply with local regulations of the Philippines. |
Dasheng Zhixing, Zhishi Training, Houdezaiwu Online and Tianjin Zhixing | |
Operations and Reorganization | |
Schedule of the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs taken as a whole, which were included in the Group's consolidated balance sheets and statements of comprehensive loss | As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 214,081 172,511 Time deposits 50,000 692,000 Short-term investments 373,972 434,548 Prepaid expenses and other current assets 211,757 262,699 Inventory 308 1,935 Amounts due from inter-company entities* 2,610,083 825,468 Property and equipment, net 10,645 14,443 Rights of use assets 19,763 67,044 Deferred tax assets — 9,684 Other assets 11,377 24,091 Total assets 3,501,986 2,504,423 Advances from students-current 2,181,798 2,718,776 Advances from students-non-current 4,783 2,270 Accrued expenses and other current liabilities 77,050 112,453 Taxes payable 1,993 3,474 Lease liability-current and non-current 17,915 64,940 Amounts due to inter-company entities* 2,202,909 207,659 Total liabilities 4,486,448 3,109,572 * All inter-company balances have been eliminated upon consolidation. For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues 1,145,517 1,478,493 2,054,095 Net income/(loss) (253,493) (20,893) 367,241 For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash provided by/(used in) operating activities (28,969) 372,668 677,263 Net cash used in investing activities (18,595) (287,360) (718,833) Net increase/(decrease) in cash and cash equivalents (47,564) 85,308 (41,570) |
51Talk English Philippines Corporation | |
Operations and Reorganization | |
Schedule of the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs taken as a whole, which were included in the Group's consolidated balance sheets and statements of comprehensive loss | As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 415 406 Prepaid expenses and other current assets 576 569 Amounts due from inter-company entities* 2,523 2,488 Total assets 3,514 3,463 Accrued expenses and other current liabilities 1,062 1,047 Taxes payable 11,766 11,603 Other non-current liabilities 247 244 Total liabilities 13,075 12,894 * All inter-company balances have been eliminated upon consolidation. For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues — — — Net loss (515) (1,843) (39) For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash used in operating activities (24) (7) — Effect of exchange rate changes on cash and cash equivalents 3 19 (9) Net increase/(decrease) in cash and cash equivalents (21) 12 (9) |
Beijing Dasheng Helloworld Technology Co., Ltd. | |
Operations and Reorganization | |
Schedule of the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs taken as a whole, which were included in the Group's consolidated balance sheets and statements of comprehensive loss | As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 743 1,516 Prepaid expenses and other current assets 4,597 5,037 Amounts due from inter-company entities* 44,672 56 Property and equipment, net 200 104 Rights of use assets 1,947 4,795 Other assets 1 34 Total assets 52,160 11,542 Amounts due to inter-company entities* 59,281 32,300 Accrued expenses and other current liabilities 7,107 7,751 Taxes payable 287 455 Lease liability 1,686 4,575 Total liabilities 68,361 45,081 * All inter-company balances have been eliminated upon consolidation. 1 Operations and Reorganization (Continued) For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues — 42,132 36,698 Net loss (1,215) (15,176) (17,621) For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash provided by operating activities 17 1,249 772 Net cash provided by / (used in) investing activities — (523) 1 Net increase in cash and cash equivalents 17 726 773 |
Shenzhen Dasheng Zhiyun Technology Co., Ltd | |
Operations and Reorganization | |
Schedule of the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIEs taken as a whole, which were included in the Group's consolidated balance sheets and statements of comprehensive loss | As of December 31, 2019 2020 RMB RMB Cash and cash equivalents 827 1,006 Amounts due from inter-company entities* 1,200 2,577 Total assets 2,027 3,583 Amounts due to inter-company entities* 906 1,581 Advances from students—current 10 — Accrued expenses and other current liabilities 824 1,300 Taxes payable 77 161 Total liabilities 1,817 3,042 * All inter-company balances have been eliminated upon consolidation. For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net revenues — 1,748 8,434 Net profit — 210 278 For the year ended December 31, 2018 2019 2020 RMB RMB RMB Net cash provided by operating activities — 827 179 Net increase in cash and cash equivalents — 827 179 |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Significant Accounting Policies | |
Schedule of revenue disaggregation | For the year ended, For the year ended, For the year ended, December 31, 2018 December 31, 2019 December 31, 2020 RMB RMB RMB RMB RMB RMB RMB RMB RMB One-on-one Small class One-on-one Small class One-on-one Small class offerings offerings Total offerings offerings Total offerings offerings Total Revenues from prepaid credit packages 1,013,803 100,748 1,114,551 1,351,405 112,787 1,464,192 1,950,932 97,082 2,048,014 —credits for lessons 1,013,803 100,748 1,114,551 1,247,401 112,787 1,360,188 1,766,183 95,282 1,861,465 —credits for learning materials — — — 101,248 — 101,248 164,494 1,800 166,294 — physical textbook and learning machine — — — 2,756 — 2,756 20,255 — 20,255 Revenues from prepaid membership packages 30,966 — 30,966 14,301 — 14,301 6,081 — 6,081 Total revenues 1,044,769 100,748 1,145,517 1,365,706 112,787 1,478,493 1,957,013 97,082 2,054,095 |
Schedule of contract liability | As of December 31, 2018 December 31, 2019 December 31, 2020 RMB RMB RMB Contract liability 1,559,875 2,029,872 2,529,915 Future output VAT associated with contract liability 93,593 121,887 151,795 Refund liability 22,653 24,255 35,407 Deposits from students 8,670 10,577 3,929 Advances from students 1,684,791 2,186,591 2,721,046 |
Schedule of share-based compensation | For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ Sales and marketing expenses (5,676) (2,951) (8,835) (1,354) Product development expenses (7,396) (3,472) (4,477) (686) General and administrative expenses (14,814) (10,309) (13,422) (2,057) Total (27,886) (16,732) (26,734) (4,097) |
Prepaid expenses and other cu_2
Prepaid expenses and other current assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Prepaid expenses and other current assets | |
Schedule of prepaid expenses and other current assets | As of December 31, 2019 2020 RMB RMB Costs to obtain contracts with customers 168,571 199,873 Prepaid taxes 13,860 25,600 Prepaid advertising expenses 18,014 19,977 Prepaid rental and other deposits 13,601 14,514 Interest receivables 2,430 10,231 Prepaid fees to third-party payment channels 8,250 8,980 Prepaid professional service fees 3,704 3,738 Advances to employees 1,658 1,723 Prepaid Directors & Officers insurance 782 852 Student tuition payments in transit 1,291 603 Prepaid PayPal to pay teacher salary costs 4,077 561 Prepaid student acquisition fees 2,093 29 Others 11,884 15,376 Total 250,215 302,057 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and equipment, net | |
Schedule of property and equipment, net | As of December 31, 2019 2020 RMB RMB Computers and equipment 63,663 70,923 Leasehold improvement 45,498 50,363 Furniture and fixtures 10,963 11,753 Vehicle 228 228 Total 120,352 133,267 Less: Accumulated depreciation (100,016) (112,092) Property and equipment, net 20,336 21,175 |
Intangible assets, net (Tables)
Intangible assets, net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Intangible assets, net | |
Schedule of intangible assets, net | As of December 31, 2019 2020 RMB RMB Trademark 2,366 2,900 Computer software 12,958 24,956 Copyright for teaching materials 6,992 7,946 Total 22,316 35,802 Less: Accumulated amortization (12,398) (15,500) Intangible assets, net 9,918 20,302 |
Schedule of amortization expense of intangible assets | Amortization Expense RMB 2021 6,822 2022 5,681 2023 4,874 2024 782 2025 and thereafter 2,143 20,302 |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Operating Leases | |
Summary of components of lease expense | As of December 31, As of December 31, 2019 2020 RMB RMB Operating lease cost 40,926 46,092 Lease cost for leases with terms less than one year 1,542 856 Total lease cost 42,468 46,948 |
Summary of maturities of lease liabilities | As of December 31, 2020 RMB 2021 43,885 2022 30,278 2023 16,970 2024 8,040 2025 and thereafter 4,111 Total undiscounted lease payments 103,284 Less: imputed interest (6,741) Total lease liabilities 96,543 |
Summary of lease terms and discount rates | As of December 31, As of December 31, 2019 2020 Weighted average remaining lease term(years) 2.40 2.77 Weighted average discount rate(percentage) 5.04 % 4.88 % |
Summary of supplemental information related to operating leases | For the year ended December 31, For the year ended December 31, 2019 2020 Cash paid for operating leases 40,840 43,190 Right of use assets obtained in exchange for operating lease liabilities 38,407 81,663 |
Accrued expenses and other cu_2
Accrued expenses and other current liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accrued expenses and other current liabilities | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2019 2020 RMB RMB Salaries, welfare and outsourcing fee payable 94,939 117,505 Accrued advertising and other expenses 36,464 68,719 Accrued professional service fees 9,847 12,566 Security deposits from agents 3,546 9,408 Advance from agents 3,366 7,041 Accrued rental and property management fees 802 2,197 Accrued intangible assets 1,150 8,866 Accrued staff reimbursements 13,315 7,049 Others 3,526 3,750 Total 166,955 237,101 |
Taxation (Tables)
Taxation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Taxation | |
Schedule of income tax expenses and benefits | For the year ended December 31, 2018 2019 2020 Overseas PRC Overseas PRC Overseas PRC entities entities Total entities entities Total entities entities Total RMB RMB RMB RMB RMB RMB RMB RMB RMB Income/(loss) before income tax expenses 13,490 (426,304) (412,814) 61,124 (160,476) (99,352) 25,645 117,216 142,861 Current income tax expenses 3,807 — 3,807 5,221 — 5,221 5,802 28 5,830 Deferred income tax expenses/(benefits) 176 (103) 73 (132) (21) (153) (247) (9,684) (9,931) Income tax expenses/(benefits) 3,983 (103) 3,880 5,089 (21) 5,068 5,555 (9,656) (4,101) |
Schedule of combined effects of income tax exemption and reduction available to the Group | Year Ended December 31, 2018 2019 2020 Tax holiday effect 1,385 622 (13,163) Basic and diluted loss per share effect 0.00 0.00 (0.04) |
Schedule of reconciliation of differences between PRC statutory tax rate and effective tax rate | As of December 31, 2018 2019 2020 PRC statutory tax rate 25.00 % 25.00 % 25.00 % Effect on tax rates in different tax jurisdiction (0.78) % 0.08 % (0.44) % Effect on tax holiday 0.34 % 0.99 % 9.21 % Changes in valuation allowance (8.14) % (16.91) % (38.91) % Permanent book-tax differences—non-deductible expenses (17.36) % (14.26) % 2.27 % Effective tax rate (0.94) % (5.10) % (2.87) % |
Schedule of significant components of deferred tax assets and deferred tax liabilities | As of December 31, 2019 2020 RMB RMB Deferred tax assets Tax loss carryforwards 241,136 175,198 Accruals and other liabilities 3,458 6,414 Advertising expenses carryforwards 73,182 83,290 Share based compensation — 2,856 Intra-company intangible assets transfer — 11,946 Defined benefits liabilities 337 584 Total deferred tax assets 318,113 280,288 Less: Deferred tax liabilities - deffered sales commissions (42,143) (49,968) Less: Valuation allowance (275,633) (220,052) Total deferred tax assets, net 337 10,268 |
Schedule of movement of valuation allowance | For the year ended December 31, 2019 2020 RMB RMB Balance at beginning of the year (258,835) (275,633) Provision (25,727) (50,258) Current period reversal 8,929 105,839 Balance at end of the year (275,633) (220,052) |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Compensation | |
Schedule of valuation of stock options using Binomial option pricing model to estimate fair value | For the year ended December 31, 2018 2019 2020 Stock options: Contractual term (in years) 10.00-10.00 9.92-10.00 10.00-10.00 Expected volatility 48.0%-49.2% 48.1%-51.0% 51.0%-58.0% Exercise multiple 2.2-2.8 2.2-2.8 2.2-2.8 Expected dividend yield — — — Risk-free interest rate (per annum) 2.7%-2.9% 1.68%-2.69% 0.66%-1.92% Expected forfeiture rate (post-vesting) — — — |
Schedule of option activities | Weighted Weighted Average Average Remaining Weighted Average Options Exercise Contractual Aggregate Intrinsic Grant Date Fair Outstanding Price Life Value Value US$ (In years) US$ RMB US$ RMB December 31, 2018 27,856,130 0.2124 6.84 7,491 51,507 0.5285 3.6335 Granted 3,272,000 0.2513 — — — 0.3293 2.2925 Exercised (5,001,660) 0.1244 — — — 0.4723 3.2877 Expired — — — — — — — Forfeited or cancelled (2,771,965) 0.3574 — — — 0.6901 4.8045 December 31, 2019 23,354,505 0.2194 6.14 10,165 70,769 0.4934 3.4351 Granted 2,149,975 0.6756 — — — 1.0778 7.0326 Exercised (5,103,015) 0.2887 — — — 0.6098 3.9786 Expired — — — — — — — Forfeited or cancelled (1,051,660) 0.5973 — — — 0.5776 3.7688 December 31, 2020 19,349,805 0.2313 5.40 30,495 198,983 0.5231 3.4132 Vested and expected to vest as of December 31, 2020 18,938,475 0.2273 5.19 29,924 195,254 0.5341 3.4850 Exercisable as of December 31, 2020 14,374,220 0.1477 4.12 23,856 155,662 0.4997 3.2604 |
Summary of the restricted share units' activities | Number of Weighted Average RSUs Grant Date Fair Value US$ RMB December 31, 2018 8,051,639 0.79 5.44 Granted 4,245,970 0.51 3.55 Vested (2,938,710) 0.76 5.29 Forfeited (1,121,259) 0.70 4.87 December 31, 2019 8,237,640 0.66 4.59 Granted 3,110,895 1.17 7.63 Vested (3,673,275) 0.70 4.59 Forfeited (245,236) 0.55 3.58 December 31, 2020 7,430,024 0.86 5.59 |
Net income_(loss) per share (Ta
Net income/(loss) per share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Net income/(loss) per share | |
Schedule of computation of basic and diluted net loss per share | For the year ended December 31, 2018 2019 2020 RMB RMB RMB Numerator: Net income/(loss) (416,694) (104,420) 146,962 Denominator: Weighted average ordinary shares outstanding —basic 304,542,400 308,364,918 319,553,690 —diluted 304,542,400 308,364,918 341,503,118 Basic net income/(loss) per share attributable to ordinary shareholders (1.37) (0.34) 0.46 Diluted net income/(loss) per share attributable to ordinary shareholders (1.37) (0.34) 0.43 Basic net income/(loss) per ADS attributable to ordinary shareholders (20.55) (5.08) 6.90 Diluted net income/(loss) per ADS attributable to ordinary shareholders (20.55) (5.08) 6.46 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair value measurement | |
Schedule of financial instruments measured at fair value by level within the fair value hierarchy | The following table sets forth financial instruments, measured at fair value on a recurring basis, by level within the fair value hierarchy, as of December 31, 2020: Fair value measurements at reporting date using Quoted Prices in Active Significant Markets Other Significant As of for Identical Observable Unobservable December 31, Assets Inputs Inputs Items 2020 (Level 1) (Level 2) (Level 3) Short-term investments 509,636 — 509,636 — The following table sets forth financial instruments, measured at fair value by level within the fair value hierarchy, as of December 31, 2019: Fair value measurements at reporting date using Quoted Prices in Active Significant Markets Other Significant As of for Identical Observable Unobservable December 31, Assets Inputs Inputs Items 2019 (Level 1) (Level 2) (Level 3) Short-term investments 452,936 — 452,936 — |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and contingencies | |
Schedule of future minimum payments under non-cancelable agreements for operating leases | Less than One One to Three Over Three Total Year Years Years RMB RMB RMB RMB Operating lease commitments 1,198 696 274 228 |
Schedule of purchase commitments | Less than One Over One Total Year Year RMB RMB RMB Purchase commitments 239,226 226,853 12,373 |
Profit appropriation and rest_2
Profit appropriation and restricted net assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Profit appropriation and restricted net assets | |
Schedule of Condensed Balance Sheets | As of December, 31 2019 2020 2020 RMB RMB US$ (Note 2(e)) ASSETS Current assets Cash and cash equivalents 6,967 15,077 2,311 Time deposits 48,748 153,614 23,542 Prepaid expenses and other current assets 3,343 8,684 1,331 Amounts due from inter-company entities 498,925 466,649 71,517 Total current assets 557,983 644,024 98,701 Non-current assets Time deposits 113,415 2,000 307 Other non-current assets — 486 74 Total non-current assets 113,415 2,486 381 Total assets 671,398 646,510 99,082 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities Accrued expenses and other current liabilities 7,585 6,533 1,001 Amounts due to inter-company entities 13,828 14,029 2,150 Tax payables 91 548 84 Total current liabilities 21,504 21,110 3,235 Non-current liabilities Deficit of investments in subsidiaries and VIEs 1,696,552 1,492,338 228,712 Total non-current liabilities 1,696,552 1,492,338 228,712 Total liabilities 1,718,056 1,513,448 231,947 Shareholders’ deficit: Ordinary shares 205 213 33 Treasury stock (6,011) (23,109) (3,542) Additional paid-in capital 1,128,079 1,199,014 183,757 Accumulated other comprehensive income 29,971 8,884 1,361 Accumulated deficit (2,198,902) (2,051,940) (314,474) Total shareholders’ deficit (1,046,658) (866,938) (132,865) Total liabilities and shareholders’ deficit 671,398 646,510 99,082 |
Schedule of Condensed Statements of Operations and Comprehensive Loss | For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 2(e)) Operating expenses: Product development expenses — — — — General and administrative expenses (14,148) (11,714) (16,559) (2,538) Share of income/(loss) of subsidiaries and VIEs (397,991) (97,293) 155,100 23,770 Total operating expenses (412,139) (109,007) 138,541 21,232 Income/(Loss) from operations (412,139) (109,007) 138,541 21,232 Impairment loss (7,364) — — — Interest income 5,406 5,614 6,149 942 Interest expenses and other expense, net (2,597) (517) 2,763 423 Income/(Loss) before income tax expenses (416,694) (103,910) 147,453 22,597 Income tax expenses — (510) (491) (74) Net income/(loss), all attributable to the Company’s ordinary shareholders (416,694) (104,420) 146,962 22,523 Comprehensive income/(loss): Net income/(loss) (416,694) (104,420) 146,962 22,523 Other comprehensive income/(loss) Foreign currency translation adjustments 16,939 5,356 (21,087) (3,232) Total comprehensive income/(loss) (399,755) (99,064) 125,875 19,291 |
Schedule of Condensed Statements of Cash Flows | For the year ended December 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 2(e)) Cash flows from operating activities: Net cash used in operating activities (3,836) (6,718) (14,977) (2,295) Cash flows from investing activities: Placement of time deposits (224,586) (167,164) (49,734) (7,622) Withdrawal of time deposits 246,326 169,412 48,635 7,454 Investment in subsidiaries (68,755) — — — Net cash provided by/(used in) investing activities (47,015) 2,248 (1,099) (168) Cash flows from financing activities: Share repurchase program — (6,011) (23,116) (3,543) Proceeds from exercise of stock options 1,611 4,334 10,330 1,583 Proceeds from issuance of stocks, net of offering expenses — — 39,942 6,121 Net cash provided by/(used in) financing activities 1,611 (1,677) 27,156 4,161 Effect of exchange rate changes on cash and cash equivalents 775 114 (2,970) (455) Net increase/(decrease) in cash and cash equivalents (48,465) (6,033) 8,110 1,243 Cash and cash equivalents at the beginning of the year 61,465 13,000 6,967 1,068 Cash and cash equivalents at the end of the year 13,000 6,967 15,077 2,311 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Information | |
Schedule of segment information | For the year ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2018 2019 2020 2020 RMB RMB RMB US$ (Note 2(e)) Net revenues One-on-one offerings 1,044,769 1,365,706 1,957,013 299,925 Small class offerings 100,748 112,787 97,082 14,879 Total net revenues 1,145,517 1,478,493 2,054,095 314,804 Cost of revenues One-on-one offerings (342,927) (386,085) (540,707) (82,867) Small class offerings (67,981) (53,838) (39,710) (6,086) Total cost of revenues (410,908) (439,923) (580,417) (88,953) Gross profit One-on-one offerings 701,842 979,621 1,416,306 217,058 Small class offerings 32,767 58,949 57,372 8,793 Total gross profit 734,609 1,038,570 1,473,678 225,851 Gross profit margin One-on-one offerings 67.2 % 71.7 % 72.4 % 72.4 % Small class offerings 32.5 % 52.3 % 59.1 % 59.1 % Total gross profit margin 64.1 % 70.2 % 71.7 % 71.7 % Sales and marketing expenses One-on-one offerings (647,314) (738,010) (991,479) (151,951) Small class offerings (83,919) (54,581) (44,141) (6,765) Total sales and marketing expenses (731,233) (792,591) (1,035,620) (158,716) Product development expenses One-on-one offerings (139,240) (138,291) (150,926) (23,131) Small class offerings (45,760) (19,214) (11,903) (1,824) Total product development expenses (185,000) (157,505) (162,829) (24,955) General and administrative expenses One-on-one offerings (186,983) (178,606) (202,955) (31,104) Small class offerings (36,074) (17,423) (11,269) (1,727) Total general and administrative expenses (223,057) (196,029) (214,224) (32,831) Operating expenses One-on-one offerings (973,537) (1,054,907) (1,345,360) (206,186) Small class offerings (165,753) (91,218) (67,313) (10,316) Total operating expenses (1,139,290) (1,146,125) (1,412,673) (216,502) Other income One-on-one offerings — — 38,683 5,928 Small class offerings — — 4,731 725 Total other income — — 43,414 6,653 Income/(loss) from operations One-on-one offerings (271,695) (75,286) 109,629 16,800 Small class offerings (132,986) (32,269) (5,210) (798) Total income/(loss) from operations (404,681) (107,555) 104,419 16,002 |
Schedule of property and equipment by geographical location | Property and equipment As of December 31, 2019 2020 RMB RMB China 16,446 18,284 Philippines 3,890 2,891 |
Operations and Reorganization_2
Operations and Reorganization (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Beijing Dasheng Zhixing Technology Co., Ltd | |
Operations and Reorganization | |
VIE interest (as a percent) | 100.00% |
51Talk English Philippines Corporation | |
Operations and Reorganization | |
VIE interest (as a percent) | 100.00% |
Shanghai Zhishi Education Training Co., Ltd | |
Operations and Reorganization | |
VIE interest (as a percent) | 100.00% |
Wuhan Houdezaiwu Online Technology Co., Ltd | |
Operations and Reorganization | |
VIE interest (as a percent) | 100.00% |
Beijing Dasheng Helloworld Technology Co., Ltd. | |
Operations and Reorganization | |
VIE interest (as a percent) | 100.00% |
Shenzhen Dasheng Zhiyun Technology Co., Ltd | |
Operations and Reorganization | |
VIE interest (as a percent) | 100.00% |
China Online Education (HK) Limited | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
51Talk English International Limited | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
China Online Innovations Inc. | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 99.99999% |
On Demand English Innovations Inc. | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 99.999% |
Beijing Dasheng Online Technology Co., Ltd. | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
Helloworld Online Education Group | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
Helloworld Online Education Group (HK) Limited | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
Beijing Helloworld Online Technology Co., Ltd. | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
TESOL Academy Online Limited | |
Operations and Reorganization | |
Subsidiaries direct or indirect ownership (as a percent) | 100.00% |
Operations and Reorganization -
Operations and Reorganization - History of the Group and Basis of Presentation for the Reorganization (Details) - shareholder | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2013 | Dec. 31, 2020 | Jan. 05, 2012 | |
Beijing Dasheng Zhixing Technology Co., Ltd | |||
Operations and Reorganization | |||
VIE interest (as a percent) | 100.00% | ||
Beijing Dasheng Zhixing Technology Co., Ltd | Founding Shareholders | |||
Operations and Reorganization | |||
Percentage of ownership set aside for an employee option plan | 15.00% | ||
VIE interest (as a percent) | 71.00% | ||
Beijing Dasheng Zhixing Technology Co., Ltd | Angel investors | |||
Operations and Reorganization | |||
VIE interest (as a percent) | 29.00% | ||
Number of individual shareholders/investors | 2 | ||
China Online Innovations Inc. | |||
Operations and Reorganization | |||
Equity interest (as a percent) | 99.99999% | ||
China Online Innovations Inc. | Individual shareholders | |||
Operations and Reorganization | |||
Number of individual shareholders/investors | 7 | ||
Beneficial interest held | 0.00001% | ||
On Demand English Innovations Inc. | |||
Operations and Reorganization | |||
Equity interest (as a percent) | 99.999% | ||
On Demand English Innovations Inc. | Individual shareholders | |||
Operations and Reorganization | |||
Number of individual shareholders/investors | 5 | ||
Beneficial interest held | 0.001% |
Operations and Reorganization_3
Operations and Reorganization - Contractual agreements with VIEs (Details) - 12 months ended Dec. 31, 2020 | CNY (¥) | USD ($) |
Beijing Dasheng Zhixing Technology Co., Ltd | ||
Contractual agreements with VIEs | ||
Consideration for exclusive option to purchase | ¥ 10 | $ 1.6 |
51Talk English Philippines Corporation | ||
Contractual agreements with VIEs | ||
Consideration for exclusive option to purchase | $ 1 | |
Beijing Dasheng Helloworld Technology Co., Ltd. | ||
Contractual agreements with VIEs | ||
Service fee (as a percent) | 100.00% | |
Maximum number of days of free access to online service (in days) | 10 days | |
Shenzhen Dasheng Zhiyun Technology Co., Ltd | ||
Contractual agreements with VIEs | ||
Service fee (as a percent) | 100.00% | |
Maximum number of days of free access to online service (in days) | 10 days |
Operations and Reorganization_4
Operations and Reorganization - Risks in relation to the VIE structure (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020USD ($) | |
Operations and Reorganization | |||||
Cash and cash equivalents | ¥ 326,647 | ¥ 342,951 | $ 50,061 | ||
Time deposits | 477,408 | 144,093 | 73,166 | ||
Short-term investments | 509,636 | 452,936 | 78,105 | ||
Prepaid expenses and other current assets | 302,057 | 250,215 | 46,292 | ||
Inventory | 1,935 | 308 | 297 | ||
Property and equipment, net | 21,175 | 20,336 | 3,245 | ||
Right of use assets | 98,001 | 56,638 | 15,019 | ||
Deferred tax assets | 10,268 | 337 | 1,574 | ||
Total assets | 2,209,548 | 1,401,817 | 338,627 | ||
Advances from students-current | 2,718,776 | 2,181,808 | 416,671 | ||
Advances from students, non-current | 2,270 | 4,783 | 348 | ||
Accrued expenses and other current liabilities | 237,101 | 166,955 | 36,337 | ||
Taxes payable | 19,288 | 21,661 | 2,956 | ||
Other non-current liabilities | 2,508 | 1,595 | 384 | ||
Lease liability | 96,543 | ||||
Total liabilities | 3,076,486 | 2,448,475 | 471,492 | ||
Net revenues | 2,054,095 | $ 314,804 | 1,478,493 | ¥ 1,145,517 | |
Net income/(loss) | 146,962 | 22,523 | (104,420) | (416,694) | |
Net cash provided by /(used in) operating activities | 719,243 | 110,228 | 397,933 | 29,781 | |
Net cash used in investing activities | (734,271) | (112,531) | (412,910) | (4,898) | |
Effect of exchange rate changes on cash and cash equivalents | (12,065) | (1,849) | (679) | (186) | |
Net increase/(decrease) in cash and cash equivalents | (16,304) | $ (2,499) | (70,192) | 93,104 | |
Accumulated deficit | 2,051,940 | 2,198,902 | $ 314,474 | ||
VIEs and VIES' subsidiaries | |||||
Operations and Reorganization | |||||
Accrued expenses and other current liabilities | 122,551 | 86,043 | |||
Taxes payable | 15,693 | 14,123 | |||
Other non-current liabilities | 244 | 247 | |||
Accumulated deficit | 723,209 | 1,073,067 | |||
Dasheng Zhixing, Zhishi Training, Houdezaiwu Online and Tianjin Zhixing | |||||
Operations and Reorganization | |||||
Cash and cash equivalents | 172,511 | 214,081 | |||
Time deposits | 692,000 | 50,000 | |||
Short-term investments | 434,548 | 373,972 | |||
Prepaid expenses and other current assets | 262,699 | 211,757 | |||
Inventory | 1,935 | 308 | |||
Amounts due from inter-company entities | 825,468 | 2,610,083 | |||
Property and equipment, net | 14,443 | 10,645 | |||
Right of use assets | 67,044 | 19,763 | |||
Deferred tax assets | 9,684 | ||||
Other assets | 24,091 | 11,377 | |||
Total assets | 2,504,423 | 3,501,986 | |||
Advances from students-current | 2,718,776 | 2,181,798 | |||
Advances from students, non-current | 2,270 | 4,783 | |||
Accrued expenses and other current liabilities | 112,453 | 77,050 | |||
Taxes payable | 3,474 | 1,993 | |||
Lease liability | 64,940 | 17,915 | |||
Amounts due to inter-company entities | 207,659 | 2,202,909 | |||
Total liabilities | 3,109,572 | 4,486,448 | |||
Net revenues | 2,054,095 | 1,478,493 | 1,145,517 | ||
Net income/(loss) | 367,241 | (20,893) | (253,493) | ||
Net cash provided by /(used in) operating activities | 677,263 | 372,668 | (28,969) | ||
Net cash used in investing activities | (718,833) | (287,360) | (18,595) | ||
Net increase/(decrease) in cash and cash equivalents | (41,570) | 85,308 | (47,564) | ||
51Talk English Philippines Corporation | |||||
Operations and Reorganization | |||||
Cash and cash equivalents | 406 | 415 | |||
Prepaid expenses and other current assets | 569 | 576 | |||
Amounts due from inter-company entities | 2,488 | 2,523 | |||
Total assets | 3,463 | 3,514 | |||
Accrued expenses and other current liabilities | 1,047 | 1,062 | |||
Taxes payable | 11,603 | 11,766 | |||
Other non-current liabilities | 244 | 247 | |||
Total liabilities | 12,894 | 13,075 | |||
Net income/(loss) | (39) | (1,843) | (515) | ||
Net cash provided by /(used in) operating activities | (7) | (24) | |||
Effect of exchange rate changes on cash and cash equivalents | (9) | 19 | 3 | ||
Net increase/(decrease) in cash and cash equivalents | (9) | 12 | (21) | ||
Beijing Dasheng Helloworld Technology Co., Ltd. | |||||
Operations and Reorganization | |||||
Cash and cash equivalents | 1,516 | 743 | |||
Prepaid expenses and other current assets | 5,037 | 4,597 | |||
Amounts due from inter-company entities | 56 | 44,672 | |||
Property and equipment, net | 104 | 200 | |||
Right of use assets | 4,795 | 1,947 | |||
Other assets | 34 | 1 | |||
Total assets | 11,542 | 52,160 | |||
Accrued expenses and other current liabilities | 7,751 | 7,107 | |||
Taxes payable | 455 | 287 | |||
Lease liability | 4,575 | 1,686 | |||
Amounts due to inter-company entities | 32,300 | 59,281 | |||
Total liabilities | 45,081 | 68,361 | |||
Net revenues | 36,698 | 42,132 | |||
Net income/(loss) | (17,621) | (15,176) | (1,215) | ||
Net cash provided by /(used in) operating activities | 772 | 1,249 | 17 | ||
Net cash used in investing activities | 1 | (523) | |||
Net increase/(decrease) in cash and cash equivalents | 773 | 726 | ¥ 17 | ||
Beijing Dasheng Zhixing Technology Co., Ltd | |||||
Operations and Reorganization | |||||
Registered capital | 1,143 | 1,143 | |||
Shenzhen Dasheng Zhiyun Technology Co., Ltd | |||||
Operations and Reorganization | |||||
Cash and cash equivalents | 1,006 | 827 | |||
Amounts due from inter-company entities | 2,577 | 1,200 | |||
Total assets | 3,583 | 2,027 | |||
Advances from students-current | 10 | ||||
Accrued expenses and other current liabilities | 1,300 | 824 | |||
Taxes payable | 161 | 77 | |||
Amounts due to inter-company entities | 1,581 | 906 | |||
Total liabilities | 3,042 | 1,817 | |||
Net revenues | 8,434 | 1,748 | |||
Net income/(loss) | 278 | 210 | |||
Net cash provided by /(used in) operating activities | 179 | 827 | |||
Net increase/(decrease) in cash and cash equivalents | ¥ 179 | ¥ 827 |
Operations and Reorganization_5
Operations and Reorganization - Liquidity and going concern (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020USD ($) | Mar. 23, 2018USD ($) | |
Liquidity | ||||||
Net losses | ¥ (146,962) | $ (22,523) | ¥ 104,420 | ¥ 416,694 | ||
Earned net income | 146,962 | |||||
Accumulated deficits | 2,051,940 | 2,198,902 | $ 314,474 | |||
Net current liabilities | 1,400,431 | 1,228,049 | ||||
Operating cash inflow | 719,243 | $ 110,228 | 397,933 | ¥ 29,781 | ||
Short-term loan | ¥ 16,578 | |||||
Balance of cash and cash equivalents, time deposits (current and non-current) and short-term investments | ¥ 1,727,691 | |||||
Subsidiaries | Hong Kong | ||||||
Liquidity | ||||||
Maximum borrowing capacity | $ | $ 13,000 |
Significant Accounting Polici_4
Significant Accounting Policies - Convenience Translation (Details) | Dec. 31, 2020 |
Significant Accounting Policies | |
Foreign currency translation rate | 6.5250 |
Significant Accounting Polici_5
Significant Accounting Policies - Short-term investment and Cash and cash equivalents (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Third party payment platforms | ||
Short-term investment and Cash and cash equivalents | ||
Cash and cash equivalents, managed accounts | ¥ 17,933 | ¥ 18,715 |
Significant Accounting Polici_6
Significant Accounting Policies - Expected Credit Losses (Details) ¥ in Thousands | Dec. 31, 2020CNY (¥) |
Significant Accounting Policies | |
Allowance for receivables | ¥ 0 |
Significant Accounting Polici_7
Significant Accounting Policies - Long-lived assets (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Long-lived assets | |||
Goodwill impairment loss | ¥ 0 | ¥ 0 | |
Impairment charge | ¥ 0 | ¥ 0 | ¥ 0 |
Major Accounting and ERP Software | |||
Long-lived assets | |||
Estimated useful lives (in years) | 10 years | ||
Other software | |||
Long-lived assets | |||
Estimated useful lives (in years) | 3 years | ||
Copy rights | |||
Long-lived assets | |||
Estimated useful lives (in years) | 5 years | ||
Computers and equipment | |||
Long-lived assets | |||
Estimated useful lives (in years) | 3 years | ||
Vehicle | |||
Long-lived assets | |||
Estimated useful lives (in years) | 4 years | ||
Furniture and fixtures | |||
Long-lived assets | |||
Estimated useful lives (in years) | 5 years | ||
Minimum | Copy rights | |||
Long-lived assets | |||
Estimated useful lives (in years) | 3 years | ||
Maximum | Copy rights | |||
Long-lived assets | |||
Estimated useful lives (in years) | 10 years |
Significant Accounting Polici_8
Significant Accounting Policies - Revenue recognition (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥)itemproduct | Dec. 31, 2020USD ($)product | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Total revenues | ¥ 2,054,095,000 | $ 314,804 | ¥ 1,478,493,000 | ¥ 1,145,517,000 |
Capitalized contract cost | 199,873,000 | |||
Amortization of contract cost | 182,134,000 | 142,772,000 | 86,394,000 | |
Impairment of contract cost assets | 0 | 0 | 0 | |
Contract liability | ||||
Contract liability | 2,529,915,000 | 2,029,872,000 | 1,559,875,000 | |
Future output VAT associated with contract liability | 151,795,000 | 121,887,000 | 93,593,000 | |
Refund liability | 35,407,000 | 24,255,000 | 22,653,000 | |
Deposits from students | 3,929,000 | 10,577,000 | 8,670,000 | |
Deferred revenues | 2,721,046,000 | 2,186,591,000 | 1,684,791,000 | |
Revenue recognized from contract with customer liability | 1,165,093,000 | |||
Revenue recognized from performance obligations satisfied | 0 | |||
Remaining performance obligation amount | ¥ 2,529,915,000 | |||
Minimum | ||||
Contract liability | ||||
Revenue expected to be recognized (in months) | 12 months | |||
Maximum | ||||
Contract liability | ||||
Revenue expected to be recognized (in months) | 18 months | |||
One-on-one offerings | ||||
Total revenues | ¥ 1,957,013,000 | 299,925 | 1,365,706,000 | 1,044,769,000 |
Small class offerings | ||||
Total revenues | ¥ 97,082,000 | $ 14,879 | 112,787,000 | 100,748,000 |
Prepaid credit packages | ||||
Total lessons | item | 3 | |||
Lessons taught by foreign teacher | item | 2 | |||
Lessons taught by Chinese teacher | product | 1 | |||
Total revenues | ¥ 2,048,014,000 | 1,464,192,000 | 1,114,551,000 | |
Prepaid credit packages | Minimum | ||||
Lesson duration | 45 | 45 | ||
Prepaid credit packages | Maximum | ||||
Lesson duration | 50 | 50 | ||
Prepaid credit packages | One-on-one offerings | ||||
Total revenues | ¥ 1,950,932,000 | 1,351,405,000 | 1,013,803,000 | |
Prepaid credit packages | One-on-one offerings | Minimum | ||||
Lesson credits | product | 20 | 20 | ||
Obligation term | 3 months | 3 months | ||
Prepaid credit packages | One-on-one offerings | Maximum | ||||
Lesson credits | product | 720 | 720 | ||
Obligation term | 60 months | 60 months | ||
Prepaid credit packages | Small class offerings | ||||
Total revenues | ¥ 97,082,000 | 112,787,000 | 100,748,000 | |
Prepaid credit packages | Small class offerings | Minimum | ||||
Obligation term | 7 days | 7 days | ||
Prepaid credit packages | Small class offerings | Maximum | ||||
Obligation term | 1 year | 1 year | ||
Credits for lessons | ||||
Total revenues | ¥ 1,861,465,000 | 1,360,188,000 | 1,114,551,000 | |
Credits for lessons | One-on-one offerings | ||||
Total revenues | 1,766,183,000 | 1,247,401,000 | 1,013,803,000 | |
Credits for lessons | Small class offerings | ||||
Total revenues | 95,282,000 | 112,787,000 | 100,748,000 | |
Credits for learning materials | ||||
Total revenues | 166,294,000 | 101,248,000 | ||
Credits for learning materials | One-on-one offerings | ||||
Total revenues | 164,494,000 | 101,248,000 | ||
Credits for learning materials | Small class offerings | ||||
Total revenues | 1,800,000 | |||
Physical textbook and learning machine | ||||
Total revenues | 20,255,000 | 2,756,000 | ||
Physical textbook and learning machine | One-on-one offerings | ||||
Total revenues | ¥ 20,255,000 | 2,756,000 | ||
Prepaid membership packages | ||||
Adjustment of effects of significant financing component | true | true | ||
Total revenues | ¥ 6,081,000 | 14,301,000 | 30,966,000 | |
Prepaid membership packages | One-on-one offerings | ||||
Total revenues | ¥ 6,081,000 | ¥ 14,301,000 | ¥ 30,966,000 | |
Copy rights | ||||
Contract liability | ||||
Estimated useful lives (in years) | 5 years | 5 years | ||
Copy rights | Minimum | ||||
Contract liability | ||||
Estimated useful lives (in years) | 3 years | 3 years | ||
Copy rights | Maximum | ||||
Contract liability | ||||
Estimated useful lives (in years) | 10 years | 10 years |
Significant Accounting Polici_9
Significant Accounting Policies - Sales and marketing expenses (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies | |||
Advertising Expense | ¥ 372,291 | ¥ 281,076 | ¥ 285,005 |
Significant Accounting Polic_10
Significant Accounting Policies - Operating leases (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies | |||
Maximum term of operating lease | 5 years | ||
Operating lease rent expense | ¥ 46,948 | ¥ 42,468 | ¥ 35,060 |
Capital leases | ¥ 0 | ¥ 0 | ¥ 0 |
Significant Accounting Polic_11
Significant Accounting Policies - Share-based compensation (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Share-based Compensation | ||||
Allocated share-based compensation expense | ¥ (26,734) | $ (4,097) | ¥ (16,732) | ¥ (27,886) |
Sales and marketing expenses | ||||
Share-based Compensation | ||||
Allocated share-based compensation expense | (8,835) | (1,354) | (2,951) | (5,676) |
Product development expenses | ||||
Share-based Compensation | ||||
Allocated share-based compensation expense | (4,477) | (686) | (3,472) | (7,396) |
General and administrative expenses | ||||
Share-based Compensation | ||||
Allocated share-based compensation expense | ¥ (13,422) | $ (2,057) | ¥ (10,309) | ¥ (14,814) |
Directors and Executive Officers | ||||
Share-based Compensation | ||||
Expected forfeiture rate (post-vesting) (as a percent) | 0.00% | 0.00% |
Significant Accounting Polic_12
Significant Accounting Policies - Employee benefits (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Employee benefits | |||
Impact on Employee benefit expense due to COVID-19 | ¥ 33,126 | ||
Cost of sales | |||
Employee benefits | |||
Impact on Employee benefit expense due to COVID-19 | 1,250 | ||
Sales and marketing expenses | |||
Employee benefits | |||
Impact on Employee benefit expense due to COVID-19 | 21,127 | ||
Product development expenses | |||
Employee benefits | |||
Impact on Employee benefit expense due to COVID-19 | 5,976 | ||
General and administrative expenses | |||
Employee benefits | |||
Impact on Employee benefit expense due to COVID-19 | 4,773 | ||
People's Republic of China | |||
Employee benefits | |||
Employee benefit expense | 57,216 | ¥ 68,088 | ¥ 54,732 |
Philippines | |||
Employee benefits | |||
Employee benefit expense | 3,650 | 3,281 | ¥ 3,107 |
Defined benefit plan liability | ¥ 2,508 | ¥ 1,595 |
Significant Accounting Polic_13
Significant Accounting Policies - Other Income (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies | ||
Government Subsidy, COVID-19 | ¥ 32,342 | |
Impact of additional Value-added Tax credit | ¥ 11,072 | ¥ 0 |
Significant Accounting Polic_14
Significant Accounting Policies - Treasury stock (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2020 | Sep. 09, 2019 |
Significant Accounting Policies | |||
Share repurchase authorized amount | $ 120,448,000 | ||
Number of shares repurchased | 852.4 | ||
Value of shares repurchased | $ 7.08 | $ 1,000 | |
Average price | $ 9.50 |
Significant Accounting Polic_15
Significant Accounting Policies - Statutory reserves (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Significant Accounting Policies | |
Minimum portion of after tax profit to be allocated to statutory surplus under PRC law (as a percentage) | 10.00% |
Statutory reserve as a percentage of registered capital up to which after-tax profit of PRC VIEs shall be transferred | 50.00% |
Minimum portion of after tax profit to be allocated to general reserve under PRC law (as a percentage) | 10.00% |
General reserve as a percentage of registered capital up to which after-tax profit of PRC subsidiaries shall be transferred | 50.00% |
Significant Accounting Polic_16
Significant Accounting Policies - Recently adopted accounting pronouncements (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020USD ($) | |
Significant Accounting Policies | |||||
Right-of-use assets | ¥ 98,001 | ¥ 56,638 | $ 15,019 | ||
Lease liability | 96,543 | ||||
Accumulated deficit | (2,051,940) | (2,198,902) | $ (314,474) | ||
Selling and marketing expense | ¥ 1,035,620 | $ 158,716 | ¥ 792,591 | ¥ 731,233 |
Significant Accounting Polic_17
Significant Accounting Policies - Government subsidy (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies | ||
Input Vat Receivable | ¥ 76,383 | |
VAT Payable | 108,725 | |
Government Subsidy, COVID-19 | 32,342 | |
Impact on Employee benefit expense due to COVID-19 | 33,126 | |
Impact of additional Value-added Tax credit | ¥ 11,072 | ¥ 0 |
Risks and concentration - Conce
Risks and concentration - Concentration of credit risk (Details) ¥ in Thousands, $ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020HKD ($) | Dec. 31, 2019CNY (¥) |
Risks and Concentration | ||||
Cash and cash equivalents | ¥ 326,647 | $ 50,061 | ¥ 342,951 | |
Time deposits | 477,408 | 73,166 | 144,093 | |
Short-term investments | 509,636 | $ 78,105 | 452,936 | |
Cash and cash equivalents | Geographic concentration risk | Hong Kong | ||||
Risks and Concentration | ||||
Cash and cash equivalents | 76,941 | 51,077 | ||
Cash, insured amount | $ | $ 500,000 | |||
Cash and cash equivalents | Geographic concentration risk | People's Republic of China | ||||
Risks and Concentration | ||||
Cash and cash equivalents | 165,936 | 205,854 | ||
Cash, insured amount | 500,000 | |||
Time deposits | Geographic concentration risk | People's Republic of China | ||||
Risks and Concentration | ||||
Time deposits | ¥ 846,408 | ¥ 213,509 |
Risks and Concentration - Con_2
Risks and Concentration - Concentration of foreign currency risks (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018 | Dec. 31, 2020USD ($) | |
Risks and Concentration | ||||
Liabilities | ¥ 3,076,486 | ¥ 2,448,475 | $ 471,492 | |
Cash, cash equivalents, time deposits and short-term investment | Foreign currency risks | ||||
Risks and Concentration | ||||
Cash, cash equivalents, time deposits and short-term investments | ¥ 1,352,909 | ¥ 693,328 | ||
Concentration risk (as a percent) | 78.30% | 65.80% | ||
Liabilities | Foreign currency risks | ||||
Risks and Concentration | ||||
Concentration risk (as a percent) | 97.60% | 96.40% | ||
Liabilities | ¥ 3,003,951 | ¥ 2,361,355 | ||
Customers whose revenue represent greater than 10% of total revenue | ||||
Risks and Concentration | ||||
Concentration risk (as a percent) | 0.00% | 0.00% | 0.00% | |
Distribution channels that represent greater than 10% of total revenues | ||||
Risks and Concentration | ||||
Concentration risk (as a percent) | 0.00% | 0.00% | 0.00% |
Risks and Concentration - Forei
Risks and Concentration - Foreign currency exchange rate risks (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Risks and Concentration | |||
Currency fluctuations, appreciation | 1.4 | 5.7 | |
Currency fluctuation, depreciation | 6.5 |
Prepaid expenses and other cu_3
Prepaid expenses and other current assets (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Prepaid expenses and other current assets | |||
Costs to obtain contracts with customers | ¥ 199,873 | ¥ 168,571 | |
Prepaid taxes | 25,600 | 13,860 | |
Prepaid advertising expenses | 19,977 | 18,014 | |
Prepaid rental and other deposits | 14,514 | 13,601 | |
Interest receivables | 10,231 | 2,430 | |
Prepaid fees to third-party payment channels | 8,980 | 8,250 | |
Prepaid professional service fees | 3,738 | 3,704 | |
Advances to employees | 1,723 | 1,658 | |
Prepaid Directors & Officers insurance | 852 | 782 | |
Students tuition payments in transit | 603 | 1,291 | |
Prepaid PayPal to pay teacher salary costs | 561 | 4,077 | |
Prepaid student acquisition fees | 29 | 2,093 | |
Others | 15,376 | 11,884 | |
Total | ¥ 302,057 | $ 46,292 | ¥ 250,215 |
Property and equipment, net (De
Property and equipment, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020USD ($) | |
Property and equipment, net | ||||
Total | ¥ 133,267 | ¥ 120,352 | ||
Less: Accumulated depreciation | (112,092) | (100,016) | ||
Property and equipment, net | 21,175 | 20,336 | $ 3,245 | |
Depreciation expenses | 15,127 | 22,698 | ¥ 29,288 | |
Computers and equipment | ||||
Property and equipment, net | ||||
Total | 70,923 | 63,663 | ||
Leasehold improvement | ||||
Property and equipment, net | ||||
Total | 50,363 | 45,498 | ||
Furniture and fixtures | ||||
Property and equipment, net | ||||
Total | 11,753 | 10,963 | ||
Vehicle | ||||
Property and equipment, net | ||||
Total | ¥ 228 | ¥ 228 |
Intangible assets, net (Details
Intangible assets, net (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020USD ($) | |
Intangible assets, net | ||||
Total | ¥ 35,802 | ¥ 22,316 | ||
Less: Accumulated amortization | (15,500) | (12,398) | ||
Intangible assets, net | 20,302 | 9,918 | $ 3,111 | |
Amortization expenses | 3,817 | 3,927 | ¥ 3,682 | |
Trademark | ||||
Intangible assets, net | ||||
Total | 2,900 | 2,366 | ||
Software | ||||
Intangible assets, net | ||||
Total | 24,956 | 12,958 | ||
Copy rights | ||||
Intangible assets, net | ||||
Total | ¥ 7,946 | ¥ 6,992 |
Intangible assets, net - Future
Intangible assets, net - Future amortization expense (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Amortization expense of intangible assets for future years | |||
2021 | ¥ 6,822 | ||
2022 | 5,681 | ||
2023 | 4,874 | ||
2024 | 782 | ||
2025 and thereafter | 2,143 | ||
Intangible assets, net | ¥ 20,302 | $ 3,111 | ¥ 9,918 |
Operating Leases (Details)
Operating Leases (Details) - CNY (¥) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Components of lease expense | ||
Operating lease cost | ¥ 46,092,000 | ¥ 40,926,000 |
Lease cost for leases with terms less than one year | 856,000 | 1,542,000 |
Total lease cost | 46,948,000 | 42,468,000 |
Variable lease cost | 0 | 0 |
Sublease income | ¥ 0 | ¥ 0 |
Operating Leases - Maturities o
Operating Leases - Maturities of lease liabilities (Details) ¥ in Thousands | Dec. 31, 2020CNY (¥) |
Maturities of lease liabilities | |
2021 | ¥ 43,885 |
2022 | 30,278 |
2023 | 16,970 |
2024 | 8,040 |
2025 and thereafter | 4,111 |
Total undiscounted lease payments | 103,284 |
Less: imputed interest | (6,741) |
Total lease liabilities | ¥ 96,543 |
Operating Leases - Lease terms
Operating Leases - Lease terms and discount rates (Details) | Dec. 31, 2020 | Dec. 31, 2019 |
Operating Leases | ||
Weighted average remaining lease term(years) | 2 years 9 months 7 days | 2 years 4 months 24 days |
Weighted average discount rate(percentage) | 4.88% | 5.04% |
Operating Leases - Supplemental
Operating Leases - Supplemental information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Leases | ||
Cash paid for operating leases | ¥ 43,190 | ¥ 40,840 |
Right of use assets obtained in exchange for operating lease liabilities | ¥ 81,663 | ¥ 38,407 |
Accrued expenses and other cu_3
Accrued expenses and other current liabilities (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Accrued expenses and other current liabilities | |||
Salaries, welfare and outsourcing fee payable | ¥ 117,505 | ¥ 94,939 | |
Accrued advertising and other expenses | 68,719 | 36,464 | |
Accrued professional service fees | 12,566 | 9,847 | |
Security deposits from agents | 9,408 | 3,546 | |
Advance from agents | 7,041 | 3,366 | |
Accrued rental and property management fees | 2,197 | 802 | |
Accrued intangible assets | 8,866 | 1,150 | |
Accrued staff reimbursements | 7,049 | 13,315 | |
Others | 3,750 | 3,526 | |
Accrued expenses and other current liabilities | ¥ 237,101 | $ 36,337 | ¥ 166,955 |
Short-term loan (Details)
Short-term loan (Details) ¥ in Thousands, $ in Thousands | Mar. 23, 2018USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) |
Line of Credit Facility | |||||||
Amount drawn | ¥ 85,856 | $ 13,000 | |||||
Short-term loan repayment | ¥ 16,367 | $ 2,508 | ¥ 52,859 | 19,060 | |||
Subsidiaries | Hong Kong | |||||||
Line of Credit Facility | |||||||
Term of loan facility | 24 months | ||||||
Maximum borrowing capacity | $ 13,000 | ||||||
Short-term loan repayment | $ 2,376 | $ 7,666 | $ 2,958 | ||||
Interest expense | ¥ | ¥ 90 | ¥ 3,110 | ¥ 1,944 | ||||
Total effective interest rate (percentage) | 6.37% | 6.37% | |||||
Subsidiaries | Hong Kong | 3-month LIBOR | |||||||
Line of Credit Facility | |||||||
Interest rate spread (as a percent) | 4.36% |
Taxation - PRC Value Added Tax
Taxation - PRC Value Added Tax (Details) - PRC | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2020 | |
Online English language education services | |||
Income taxes | |||
VAT tax (as a percent) | 6.00% | ||
Learning materials | |||
Income taxes | |||
VAT tax (as a percent) | 10.00% | 9.00% | |
Textbooks | |||
Income taxes | |||
VAT tax (as a percent) | 13.00% |
Taxation - Income taxes (Detail
Taxation - Income taxes (Details) ¥ in Thousands, $ in Millions | 12 Months Ended | 24 Months Ended | ||||
Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2020HKD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Income taxes | ||||||
Valuation allowance | ¥ | ¥ 220,052 | ¥ 275,633 | ¥ 258,835 | |||
Cayman Islands | ||||||
Income taxes | ||||||
Withholding tax | ¥ | ¥ 0 | |||||
Philippines | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 30.00% | |||||
Value Added Tax Rate | 12.00% | |||||
Valuation allowance | $ | $ 0 | $ 0 | ||||
Income tax holiday (in years) | P4Y | |||||
Philippines | Philippines Co II | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 30.00% | |||||
Percentage of exemption from corporate income tax | 100.00% | |||||
PRC | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 25.00% | 25.00% | 25.00% | |||
PRC | VIEs and VIES' subsidiaries | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 25.00% | 25.00% | 25.00% | |||
PRC | Beijing Dasheng Online Technology Co., Ltd. | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 15.00% | 15.00% | 15.00% | |||
First HK$2 million of profits | Hong Kong | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 8.25% | 8.25% | ||||
Profits earned by subsidiaries | $ | $ 2 | |||||
Remaining profits | Hong Kong | ||||||
Income taxes | ||||||
Income tax rate (as a percent) | 16.50% | 16.50% |
Taxation - PRC Withholding Tax
Taxation - PRC Withholding Tax on Dividends (Details) - PRC | 12 Months Ended |
Dec. 31, 2020 | |
Income taxes | |
Withholding tax rate on dividends distributed by a foreign-invested entity ("FIE") to its immediate holding company outside of China (as a percent) | 10.00% |
Reduced withholding tax rate, if the foreign investor owns directly at least 25% of the shares of the FIE. (as a percent) | 5.00% |
Minimum percentage of equity interest in a PRC-resident enterprise to be held by a qualified Hong Kong tax resident for reduced withholding tax rate | 25.00% |
Taxation - Income tax expenses
Taxation - Income tax expenses (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
(Loss)/income before income tax expenses | ||||
Income /(loss) before income tax expenses, Overseas entities | ¥ 25,645 | ¥ 61,124 | ¥ 13,490 | |
Income /(loss) before income tax expenses, PRC entities | 117,216 | (160,476) | (426,304) | |
Total | 142,861 | (99,352) | (412,814) | |
Current income tax expenses, Overseas entitites | 5,802 | 5,221 | 3,807 | |
Current income tax expenses, PRC entities | 28 | |||
Current income tax expenses | 5,830 | 5,221 | 3,807 | |
Deferred income tax expenses/(benefit), Overseas entities | (247) | (132) | 176 | |
Deferred income tax expenses/(benefit), PRC entities | (9,684) | (21) | (103) | |
Deferred Income Tax Expense (Benefit) | (9,931) | $ (1,522) | (153) | 73 |
Income tax expenses/(benefit), Overseas entities | 5,555 | 5,089 | 3,983 | |
Income tax expenses/(benefit), PRC entities | (9,656) | (21) | (103) | |
Income tax expenses/(benefit) | ¥ (4,101) | $ (629) | ¥ 5,068 | ¥ 3,880 |
Taxation - Tax holiday effect (
Taxation - Tax holiday effect (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Taxation | |||
Tax holiday effect | ¥ (13,163) | ¥ 622 | ¥ 1,385 |
Basic and diluted benefit per share effect | ¥ 0 | ¥ 0 | |
Basic and diluted benefit per share | ¥ (0.04) |
Taxation - Reconciliation of st
Taxation - Reconciliation of statutory tax rate and effective tax rate (Details) - PRC | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of the differences between statutory tax rate and the effective tax rate for China | |||
PRC statutory tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
Effect on tax rates in different tax jurisdiction (as a percent) | (0.44%) | 0.08% | (0.78%) |
Effect on tax holiday (as a percent) | 9.21% | 0.99% | 0.34% |
Changes in valuation allowance (as a percent) | (38.91%) | (16.91%) | (8.14%) |
Permanent book-tax differences-non-deductible expenses (as a percent) | 2.27% | (14.26%) | (17.36%) |
Effective tax rate (as a percent) | (2.87%) | (5.10%) | (0.94%) |
Taxation - Deferred Tax Assets
Taxation - Deferred Tax Assets and Liabilities (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets, | |||
Tax loss carryforwards | ¥ 175,198 | ¥ 241,136 | |
Accruals and other liabilities | 6,414 | 3,458 | |
Advertising expenses carryforwards | 83,290 | 73,182 | |
Share based compensation | 2,856 | ||
Intra-company IA Migration | 11,946 | ||
Defined benefit liabilities | 584 | 337 | |
Total deferred tax assets | 280,288 | 318,113 | |
Less: Deferred sales commissions | (49,968) | (42,143) | |
Less: Valuation allowance | (220,052) | (275,633) | ¥ (258,835) |
Total deferred tax assets, net | 10,268 | ¥ 337 | |
Tax loss carryforwards | |||
Tax loss carryforwards will expire in 2021 | 0 | ||
Tax loss carryforwards will expire in 2022 | 6,813 | ||
Tax loss carryforwards will expire in 2023 | 220,631 | ||
Tax loss carryforwards will expire in 2024 | 44,279 | ||
Tax loss carryforwards will expire in 2025 | ¥ 89,803 |
Taxation - Movement of Valuatio
Taxation - Movement of Valuation Allowance (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Taxation | ||
Balance at beginning of the year | ¥ (275,633) | ¥ (258,835) |
Provision | (50,258) | (25,727) |
Current period reversal | 105,839 | 8,929 |
Balance at end of the year | ¥ (220,052) | ¥ (275,633) |
Ordinary shares (Details)
Ordinary shares (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | Jun. 04, 2020CNY (¥)shares | Jun. 04, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥) | Dec. 31, 2020$ / sharesshares | Dec. 31, 2019shares |
Ordinary shares | |||||
Redesignation or conversion ratio adopted for conversion of ordinary shares into Class B shares prior to the completion of the IPO | 1 | ||||
Follow-on public offering | ¥ | ¥ 39,897 | ||||
Ordinary shares authorized | 1,500,000,000 | 1,500,000,000 | |||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Ordinary shares issued | 325,733,064 | 313,857,894 | |||
Ordinary shares outstanding | 323,640,564 | 312,051,174 | |||
Follow on Offering [Member] | |||||
Ordinary shares | |||||
Follow-on public offering | $ | $ 6,216 | ||||
Class A ordinary shares | |||||
Ordinary shares | |||||
Follow-on public offering | ¥ | ¥ 44,004 | ||||
Ordinary shares authorized | 1,000,000,000 | ||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Ordinary shares issued | 196,045,898 | 90,744,233 | |||
Ordinary shares outstanding | 193,953,398 | 88,937,513 | |||
Class A ordinary shares | Follow on Offering [Member] | |||||
Ordinary shares | |||||
Follow-on public offering (in shares) | 4,907,100 | 4,907,100 | |||
Shares price (in dollars per share) | $ / shares | $ 1.27 | ||||
Class B ordinary shares | |||||
Ordinary shares | |||||
Ordinary shares authorized | 350,000,000 | ||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||
Ordinary shares issued | 129,687,166 | 223,113,661 | |||
Ordinary shares outstanding | 129,687,166 | 223,113,661 | |||
Ordinary shares to be designated | |||||
Ordinary shares | |||||
Ordinary shares authorized | 150,000,000 | ||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.0001 |
Share-based Compensation - Gene
Share-based Compensation - General (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥)itemshares | Dec. 31, 2020USD ($)itemshares | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Share-based Compensation | ||||
Share-based compensation expenses | ¥ 26,734 | $ 4,097 | ¥ 16,732 | ¥ 27,886 |
Unrecognized compensation cost | ¥ | ¥ 48,416 | |||
Period of recognition of compensation cost | 2 years 2 months 26 days | 2 years 2 months 26 days | ||
Class A ordinary shares | ||||
Share-based Compensation | ||||
Shares reserved for future issuance (as a percent) | 1.50% | 1.50% | ||
Class A ordinary shares | Pre-IPO Plans | ||||
Share-based Compensation | ||||
Shares authorized to grant (in shares) | 36,229,922 | |||
Class A ordinary shares | 2016 Plan | ||||
Share-based Compensation | ||||
Shares authorized to grant (in shares) | 4,600,000 | |||
Number of shares available after consideration and other changes | 14,978,899 | 14,978,899 | ||
Employee stock option | ||||
Share-based Compensation | ||||
Contractual term (in years) | 10 years | 10 years | ||
Employee stock option | Pre-IPO Plans | Minimum | ||||
Share-based Compensation | ||||
Continuous service period (in years) | 3 years | 3 years | ||
Employee stock option | Pre-IPO Plans | Maximum | ||||
Share-based Compensation | ||||
Continuous service period (in years) | 4 years | 4 years | ||
Employee stock option | Schedule A | Pre-IPO Plans | Vesting second anniversary | ||||
Share-based Compensation | ||||
Vesting percentage (as a percent) | 50.00% | 50.00% | ||
Vesting period | 2 years | 2 years | ||
Employee stock option | Schedule A | Pre-IPO Plans | Vesting in third anniversary | ||||
Share-based Compensation | ||||
Vesting percentage (as a percent) | 25.00% | 25.00% | ||
Vesting period | 3 years | 3 years | ||
Employee stock option | Schedule A | Pre-IPO Plans | Vesting in fourth anniversary | ||||
Share-based Compensation | ||||
Vesting percentage (as a percent) | 25.00% | 25.00% | ||
Vesting period | 4 years | 4 years | ||
Employee stock option | Schedule B | Pre-IPO Plans | ||||
Share-based Compensation | ||||
Vesting period | 4 years | 4 years | ||
Vesting at each anniversary (as a percent) | 25.00% | 25.00% | ||
Employee stock option | Schedule C | Pre-IPO Plans | ||||
Share-based Compensation | ||||
Vesting period | 3 years | 3 years | ||
Vesting at each anniversary (as a percent) | 33.00% | 33.00% | ||
RSUs | 2016 Plan | Minimum | ||||
Share-based Compensation | ||||
Number of vesting schedules | item | 1 | 1 | ||
Vesting period | 2 years | 2 years | ||
RSUs | 2016 Plan | Maximum | ||||
Share-based Compensation | ||||
Number of vesting schedules | item | 4 | 4 | ||
Vesting period | 4 years | 4 years | ||
RSUs | Schedule D | 2016 Plan | Vesting second anniversary | Maximum | ||||
Share-based Compensation | ||||
Vesting at each anniversary (as a percent) | 50.00% | 50.00% | ||
RSUs | Schedule D | 2016 Plan | Vest at third and fourth anniversary | Minimum | ||||
Share-based Compensation | ||||
Vesting at each anniversary (as a percent) | 25.00% | 25.00% | ||
RSUs | Schedule E | 2016 Plan | ||||
Share-based Compensation | ||||
Vesting each quarter (as a percent) | 6.25% | 6.25% | ||
RSUs | Schedule F | 2016 Plan | ||||
Share-based Compensation | ||||
Vesting period | 4 years | 4 years | ||
Vesting at each anniversary (as a percent) | 25.00% | 25.00% | ||
RSUs | Schedule G | 2016 Plan | ||||
Share-based Compensation | ||||
Vesting period | 2 years | 2 years | ||
Vesting at each anniversary (as a percent) | 50.00% | 50.00% |
Share-based Compensation - Valu
Share-based Compensation - Valuation (Details) - Employee stock option | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock options: | |||
Expected volatility, minimum (as a percent) | 51.00% | 48.10% | 48.00% |
Expected volatility, maximum (as a percent) | 58.00% | 51.00% | 49.20% |
Risk-free interest rate, minimum (per annum) | 0.66% | ||
Risk-free interest rate, maximum (per annum) | 1.92% | ||
Minimum | |||
Stock options: | |||
Contractual term (in years) | 10 years | 9 years 11 months 1 day | 10 years |
Exercise multiple | 2.2 | 2.2 | 2.2 |
Risk-free interest rate, minimum (per annum) | 1.68% | 2.70% | |
Maximum | |||
Stock options: | |||
Contractual term (in years) | 10 years | 10 years | 10 years |
Exercise multiple | 2.8 | 2.8 | 2.8 |
Risk-free interest rate, maximum (per annum) | 2.69% | 2.90% |
Share-based Compensation - Acti
Share-based Compensation - Activity (Details) - Pre-IPO Plans ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020USD ($)¥ / shares$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019USD ($)¥ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)¥ / sharesshares | Dec. 31, 2020CNY (¥)shares | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Options Outstanding | |||||||||
Outstanding, beginning (in shares) | shares | 23,354,505 | 23,354,505 | 27,856,130 | 27,856,130 | |||||
Options granted (in shares) | shares | 2,149,975 | 2,149,975 | 3,272,000 | 3,272,000 | |||||
Exercised (in shares) | shares | (5,103,015) | (5,103,015) | (5,001,660) | (5,001,660) | |||||
Forfeited (in shares) | shares | (1,051,660) | (1,051,660) | (2,771,965) | (2,771,965) | |||||
Outstanding, ending (in shares) | shares | 19,349,805 | 19,349,805 | 23,354,505 | 23,354,505 | 27,856,130 | 27,856,130 | |||
Vested and expected to vest, ending (in shares) | shares | 18,938,475 | 18,938,475 | 18,938,475 | ||||||
Exercisable, ending (in shares) | shares | 14,374,220 | 14,374,220 | 14,374,220 | ||||||
Weighted Average Exercise Price | |||||||||
Outstanding, beginning (per share) | $ / shares | $ 0.2194 | $ 0.2124 | |||||||
Granted (per share) | $ / shares | 0.6756 | 0.2513 | |||||||
Exercised (per share) | $ / shares | 0.2887 | 0.1244 | |||||||
Forfeited (per share) | $ / shares | 0.5973 | 0.3574 | |||||||
Outstanding, ending (per share) | $ / shares | 0.2313 | $ 0.2194 | $ 0.2124 | ||||||
Vested and expected to vest, ending (per share) | $ / shares | 0.2273 | $ 0.2273 | |||||||
Exercisable, ending (per share) | $ / shares | $ 0.1477 | $ 0.1477 | |||||||
Weighted Average Remaining Contractual Life (in years) | |||||||||
Outstanding | 5 years 4 months 24 days | 5 years 4 months 24 days | 6 years 1 month 20 days | 6 years 1 month 20 days | 6 years 10 months 2 days | 6 years 10 months 2 days | |||
Vested and expected to vest at the end of the period | 5 years 2 months 8 days | 5 years 2 months 8 days | |||||||
Exercisable at the end of the period | 4 years 1 month 13 days | 4 years 1 month 13 days | |||||||
Aggregate Intrinsic Value | |||||||||
Outstanding | $ 30,495 | $ 30,495 | $ 10,165 | $ 10,165 | $ 7,491 | $ 7,491 | ¥ 198,983 | ¥ 70,769 | ¥ 51,507 |
Vested and expected to vest | 29,924 | 29,924 | 195,254 | ||||||
Exercisable | $ 23,856 | $ 23,856 | ¥ 155,662 | ||||||
Weighted Average Grant Date Fair Value | |||||||||
Outstanding, beginning (per share) | (per share) | $ 0.4934 | $ 3.4351 | $ 0.5285 | $ 3.6335 | |||||
Granted (per share) | (per share) | 1.0778 | 7.0326 | 0.3293 | 2.2925 | |||||
Exercised (per share) | (per share) | 0.6098 | 3.9786 | 0.4723 | 3.2877 | |||||
Forfeited (per share) | (per share) | 0.5776 | 3.7688 | 0.6901 | 4.8045 | |||||
Outstanding, ending (per share) | (per share) | $ 0.5231 | $ 3.4132 | $ 0.4934 | $ 3.4351 | $ 0.5285 | $ 3.6335 | |||
Vested and expected to vest, ending (per share) | 0.5341 | 3.4850 | |||||||
Exercisable, ending (per share) | 0.4997 | 3.2604 |
Share-based Compensation - RSUs
Share-based Compensation - RSUs (Details) - RSUs | 12 Months Ended | |||
Dec. 31, 2020$ / sharesshares | Dec. 31, 2020¥ / sharesshares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2019¥ / sharesshares | |
Numbers of Shares | ||||
Beginning of the period (in shares) | 8,237,640 | 8,237,640 | 8,051,639 | 8,051,639 |
Granted (in shares) | 3,110,895 | 3,110,895 | 4,245,970 | 4,245,970 |
Vested (in shares) | (3,673,275) | (3,673,275) | (2,938,710) | (2,938,710) |
Forfeited (in shares) | (245,236) | (245,236) | (1,121,259) | (1,121,259) |
End of the period (in shares) | 7,430,024 | 7,430,024 | 8,237,640 | 8,237,640 |
Weighted Average Grant Date Fair Value | ||||
Beginning of the period (per share) | (per share) | $ 0.66 | ¥ 4.59 | $ 0.79 | ¥ 5.44 |
Granted (per share) | (per share) | 1.17 | 7.63 | 0.51 | 3.55 |
Vested (per share) | (per share) | 0.70 | 4.59 | 0.76 | 5.29 |
Forfeited (per share) | (per share) | 0.55 | 3.58 | 0.70 | 4.87 |
End of the period (per share) | (per share) | $ 0.86 | ¥ 5.59 | $ 0.66 | ¥ 4.59 |
Net income_(loss) per share (De
Net income/(loss) per share (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥)¥ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | |
Numerator: | ||||
Net income/(loss) | ¥ 146,962 | $ 22,523 | ¥ (104,420) | ¥ (416,694) |
Numerator for basic and diluted loss per share | ¥ 146,962 | $ 22,523 | ¥ (104,420) | ¥ (416,694) |
Denominator: | ||||
Weighted average ordinary shares outstanding-basic | 319,553,690 | 319,553,690 | 308,364,918 | 304,542,400 |
Weighted average ordinary shares outstanding-diluted | 341,503,118 | 341,503,118 | 308,364,918 | 304,542,400 |
Net income/(loss) per share attributable to ordinary shareholders-basic | (per share) | ¥ 0.46 | $ 0.07 | ¥ (0.34) | ¥ (1.37) |
Diluted net income/(loss) per share attributable to ordinary shareholders | (per share) | ¥ 0.43 | $ 0.07 | ¥ (0.34) | ¥ (1.37) |
Stock options and restricted share units | ||||
Net loss per share | ||||
Anti-dilutive and excluded from the calculation of diluted net loss per share (in shares) | 134,722 | 134,722 | 27,421,502 | 26,635,519 |
ADS | ||||
Denominator: | ||||
Net income/(loss) per share attributable to ordinary shareholders-basic | (per share) | ¥ 6.90 | $ 1.06 | ¥ (5.08) | ¥ (20.55) |
Diluted net income/(loss) per share attributable to ordinary shareholders | (per share) | ¥ 6.46 | $ 0.99 | ¥ (5.08) | ¥ (20.55) |
Fair value measurement (Details
Fair value measurement (Details) ¥ in Thousands, $ in Thousands | Mar. 23, 2018USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019CNY (¥) |
Financial instruments, measured at fair value by level within the fair value hierarchy | |||
Short-term investments | ¥ 509,636 | ¥ 452,936 | |
Level 2 | |||
Financial instruments, measured at fair value by level within the fair value hierarchy | |||
Short-term investments | ¥ 509,636 | ¥ 452,936 | |
Subsidiaries | Hong Kong | |||
Financial instruments, measured at fair value by level within the fair value hierarchy | |||
Term of loan facility | 24 months | ||
Maximum borrowing capacity | $ | $ 13,000 |
Commitments and contingencies_2
Commitments and contingencies (Details) ¥ in Thousands | Dec. 31, 2020CNY (¥) |
Operating lease commitments | |
Total future minimum payments under non-cancelable agreements for operating leases | ¥ 1,198 |
Less than One Year | 696 |
One to Three Years | 274 |
Over Three Years | 228 |
Purchase commitments | |
Total | 239,226 |
Less than One Year | 226,853 |
Over One Year | ¥ 12,373 |
Related party transactions (Det
Related party transactions (Details) - CNY (¥) ¥ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Beijing Dasheng Zhixing Technology Co., Ltd | ||
Related party transactions | ||
Fair value of promotion | ¥ 76 | ¥ 535 |
Profit appropriation and rest_3
Profit appropriation and restricted net assets (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Profit appropriation and restricted net assets | ||
Percentage of after-tax profits required to be appropriated to statutory general reserve fund | 10.00% | |
General reserve as a percentage of registered capital up to which after-tax profit of PRC subsidiary, VIE and VIE's subsidiary shall be transferred | 50.00% | |
Registered capital of the Company's PRC subsidiary and consolidated VIEs | ¥ 378,014 | ¥ 140,008 |
Profit appropriation and rest_4
Profit appropriation and restricted net assets - Condensed Balance Sheets (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Condensed Balance Sheet Statements, Captions [Line Items] | ||||||
Cash and cash equivalents | ¥ 326,647 | ¥ 342,951 | $ 50,061 | |||
Time deposits | 477,408 | 144,093 | 73,166 | |||
Prepaid expenses and other current assets | 302,057 | 250,215 | 46,292 | |||
Time deposits | 414,000 | 113,415 | 63,448 | |||
Other non-current assets | 23,896 | 6,447 | 3,662 | |||
Accrued expenses and other current liabilities | 237,101 | 166,955 | 36,337 | |||
Taxes payable | 19,288 | 21,661 | 2,956 | |||
Total current liabilities | 3,018,114 | 2,418,552 | 462,546 | |||
Liabilities, Noncurrent | 58,372 | 29,923 | 8,946 | |||
Total liabilities | 3,076,486 | 2,448,475 | 471,492 | |||
Ordinary shares | 213 | 205 | 33 | |||
Treasury stock | 23,109 | 6,011 | 3,542 | |||
Additional paid-in capital | 1,199,014 | 1,128,079 | 183,757 | |||
Accumulated other comprehensive income | 8,884 | 29,971 | 1,361 | |||
Accumulated deficit | (2,051,940) | (2,198,902) | (314,474) | |||
Total shareholders' deficit | (866,938) | (1,046,658) | (132,865) | ¥ (962,649) | ¥ (668,391) | |
Total liabilities and shareholders' deficit | 2,209,548 | 1,401,817 | 338,627 | |||
Condensed | ||||||
Condensed Balance Sheet Statements, Captions [Line Items] | ||||||
Cash and cash equivalents | 15,077 | 6,967 | 2,311 | |||
Time deposits | 153,614 | 48,748 | 23,542 | |||
Prepaid expenses and other current assets | 8,684 | 3,343 | 1,331 | |||
Amounts due from inter-company entities | 466,649 | 498,925 | 71,517 | |||
Current assets | 644,024 | 557,983 | 98,701 | |||
Time deposits | 2,000 | 113,415 | 307 | |||
Other non-current assets | 486 | 74 | ||||
Noncurrent assets including intercompany | 2,486 | 113,415 | 381 | |||
Total assets | 646,510 | 671,398 | 99,082 | |||
Accrued expenses and other current liabilities | 6,533 | 7,585 | 1,001 | |||
Amounts due to inter-company entities | 14,029 | 13,828 | 2,150 | |||
Taxes payable | 548 | 91 | 84 | |||
Total current liabilities | 21,110 | 21,504 | 3,235 | |||
Deficit of investments in subsidiaries and VIEs | 1,492,338 | $ 228,712 | 1,696,552 | |||
Liabilities, Noncurrent | 1,492,338 | 1,696,552 | 228,712 | |||
Total liabilities | 1,513,448 | 1,718,056 | 231,947 | |||
Ordinary shares | 213 | 205 | 33 | |||
Treasury stock | (23,109) | (6,011) | (3,542) | |||
Additional paid-in capital | 1,199,014 | 1,128,079 | 183,757 | |||
Accumulated other comprehensive income | 8,884 | 29,971 | 1,361 | |||
Accumulated deficit | (2,051,940) | (2,198,902) | (314,474) | |||
Total shareholders' deficit | (866,938) | (1,046,658) | (132,865) | |||
Total liabilities and shareholders' deficit | ¥ 646,510 | ¥ 671,398 | $ 99,082 |
Profit appropriation and rest_5
Profit appropriation and restricted net assets - Condensed Statements of Operations and Comprehensive Income/(Loss) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Condensed Statement of Income Captions [Line Items] | ||||
Product development expenses | ¥ 162,829 | $ 24,955 | ¥ 157,505 | ¥ 185,000 |
General and administrative expenses | 214,224 | 32,831 | 196,029 | 223,057 |
Total operating expenses | 1,412,673 | 216,502 | 1,146,125 | 1,139,290 |
Income/(loss) from operations | 104,419 | 16,002 | (107,555) | (404,681) |
Impairment loss | (7,364) | |||
Interest income | 38,508 | 5,902 | 17,654 | 9,167 |
Interest expenses and other expense, net | 66 | 10 | 9,451 | 9,936 |
Income/(loss) before income tax expenses | 142,861 | 21,894 | (99,352) | (412,814) |
Income tax benefits/(expenses) | 4,101 | 629 | (5,068) | (3,880) |
Net income/(loss), all attributable to the Company's ordinary shareholders | 146,962 | 22,523 | (104,420) | (416,694) |
Net income/(loss) | 146,962 | 22,523 | (104,420) | (416,694) |
Foreign currency translation adjustments | (21,087) | (3,232) | 5,356 | 16,939 |
Total comprehensive income/(loss) | 125,875 | 19,291 | (99,064) | (399,755) |
Condensed | ||||
Condensed Statement of Income Captions [Line Items] | ||||
Product development expenses | 0 | 0 | 0 | 0 |
General and administrative expenses | (16,559) | (2,538) | (11,714) | (14,148) |
Share of income/(loss) of subsidiaries and VIEs | 155,100 | 23,770 | (97,293) | (397,991) |
Total operating expenses | 138,541 | 21,232 | (109,007) | (412,139) |
Income/(loss) from operations | 138,541 | 21,232 | (109,007) | (412,139) |
Impairment loss | 0 | 0 | 0 | (7,364) |
Interest income | 6,149 | 942 | 5,614 | 5,406 |
Interest expenses and other expense, net | 2,763 | 423 | (517) | (2,597) |
Income/(loss) before income tax expenses | 147,453 | 22,597 | (103,910) | (416,694) |
Income tax benefits/(expenses) | (491) | (74) | (510) | 0 |
Net income/(loss), all attributable to the Company's ordinary shareholders | 146,962 | 22,523 | (104,420) | (416,694) |
Net income/(loss) | 146,962 | 22,523 | (104,420) | (416,694) |
Foreign currency translation adjustments | (21,087) | (3,232) | 5,356 | 16,939 |
Total comprehensive income/(loss) | ¥ 125,875 | $ 19,291 | ¥ (99,064) | ¥ (399,755) |
Profit appropriation and rest_6
Profit appropriation and restricted net assets - Condensed Cash Flows (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Condensed Cash Flow Statements, Captions [Line Items] | ||||
Net cash provided by /(used in) operating activities | ¥ 719,243 | $ 110,228 | ¥ 397,933 | ¥ 29,781 |
Placement of time deposits | (789,331) | (120,970) | (443,454) | (224,586) |
Withdrawal of time deposits | 144,991 | 22,221 | 351,281 | 276,326 |
Net cash provided by/(used in) investing activities | (734,271) | (112,531) | (412,910) | (4,898) |
Share repurchase program | (23,116) | (3,543) | (6,011) | |
Proceeds from exercise of stock options | 10,330 | 1,583 | 4,334 | 1,611 |
Proceeds from issuance of stock, net of offering expenses | 39,942 | 6,121 | ||
Net cash provided by (used in) financing activities | 10,789 | 1,653 | (54,536) | 68,407 |
Effect of exchange rate changes on cash and cash equivalents | (12,065) | (1,849) | (679) | (186) |
Net increase /(decrease) in cash and cash equivalents | (16,304) | (2,499) | (70,192) | 93,104 |
Cash and cash equivalents at the beginning of the year | 342,951 | 52,560 | 413,143 | 320,039 |
Cash and cash equivalents at the end of the year | 326,647 | 50,061 | 342,951 | 413,143 |
Condensed | ||||
Condensed Cash Flow Statements, Captions [Line Items] | ||||
Net cash provided by /(used in) operating activities | (14,977) | (2,295) | (6,718) | (3,836) |
Placement of time deposits | (49,734) | (7,622) | (167,164) | (224,586) |
Withdrawal of time deposits | 48,635 | 7,454 | 169,412 | 246,326 |
Investment in subsidiaries | (68,755) | |||
Net cash provided by/(used in) investing activities | (1,099) | (168) | 2,248 | (47,015) |
Share repurchase program | (23,116) | (3,543) | (6,011) | |
Proceeds from exercise of stock options | 10,330 | 1,583 | 4,334 | 1,611 |
Proceeds from issuance of stock, net of offering expenses | 39,942 | 6,121 | ||
Net cash provided by (used in) financing activities | 27,156 | 4,161 | (1,677) | 1,611 |
Effect of exchange rate changes on cash and cash equivalents | (2,970) | (455) | 114 | 775 |
Net increase /(decrease) in cash and cash equivalents | 8,110 | 1,243 | (6,033) | (48,465) |
Cash and cash equivalents at the beginning of the year | 6,967 | 1,068 | 13,000 | 61,465 |
Cash and cash equivalents at the end of the year | ¥ 15,077 | $ 2,311 | ¥ 6,967 | ¥ 13,000 |
Segment Information - Segment (
Segment Information - Segment (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020CNY (¥)segment | Dec. 31, 2020USD ($)segment | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
Operating segments | 2 | 2 | ||
Net revenues | ¥ 2,054,095 | $ 314,804 | ¥ 1,478,493 | ¥ 1,145,517 |
Cost of revenues | (580,417) | (88,953) | (439,923) | (410,908) |
Gross profit | ¥ 1,473,678 | $ 225,851 | ¥ 1,038,570 | ¥ 734,609 |
Gross margin (as a percent) | 71.70% | 71.70% | 70.20% | 64.10% |
Sales and marketing expenses | ¥ (1,035,620) | $ (158,716) | ¥ (792,591) | ¥ (731,233) |
Product development expenses | (162,829) | (24,955) | (157,505) | (185,000) |
General and administrative expenses | (214,224) | (32,831) | (196,029) | (223,057) |
Operating expenses | (1,412,673) | (216,502) | (1,146,125) | (1,139,290) |
Other income | 43,414 | 6,653 | ||
Income/(loss) from operations | 104,419 | 16,002 | (107,555) | (404,681) |
One-on-one offerings | ||||
Net revenues | 1,957,013 | 299,925 | 1,365,706 | 1,044,769 |
Cost of revenues | (540,707) | (82,867) | (386,085) | (342,927) |
Gross profit | ¥ 1,416,306 | $ 217,058 | ¥ 979,621 | ¥ 701,842 |
Gross margin (as a percent) | 72.40% | 72.40% | 71.70% | 67.20% |
Sales and marketing expenses | ¥ (991,479) | $ (151,951) | ¥ (738,010) | ¥ (647,314) |
Product development expenses | (150,926) | (23,131) | (138,291) | (139,240) |
General and administrative expenses | (202,955) | (31,104) | (178,606) | (186,983) |
Operating expenses | (1,345,360) | (206,186) | (1,054,907) | (973,537) |
Other income | 38,683 | 5,928 | ||
Income/(loss) from operations | 109,629 | 16,800 | (75,286) | (271,695) |
Small class offerings | ||||
Net revenues | 97,082 | 14,879 | 112,787 | 100,748 |
Cost of revenues | (39,710) | (6,086) | (53,838) | (67,981) |
Gross profit | ¥ 57,372 | $ 8,793 | ¥ 58,949 | ¥ 32,767 |
Gross margin (as a percent) | 59.10% | 59.10% | 52.30% | 32.50% |
Sales and marketing expenses | ¥ (44,141) | $ (6,765) | ¥ (54,581) | ¥ (83,919) |
Product development expenses | (11,903) | (1,824) | (19,214) | (45,760) |
General and administrative expenses | (11,269) | (1,727) | (17,423) | (36,074) |
Operating expenses | (67,313) | (10,316) | (91,218) | (165,753) |
Other income | 4,731 | 725 | ||
Income/(loss) from operations | ¥ (5,210) | $ (798) | ¥ (32,269) | ¥ (132,986) |
Segment Information - Geographi
Segment Information - Geographical location (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2020CNY (¥)country | Dec. 31, 2020USD ($)country | Dec. 31, 2019CNY (¥) |
Segment reporting | |||
Principal geographical areas | country | 2 | 2 | |
Property and equipment, net | ¥ 21,175 | $ 3,245 | ¥ 20,336 |
People's Republic of China | |||
Segment reporting | |||
Property and equipment, net | 18,284 | 16,446 | |
Philippines | |||
Segment reporting | |||
Property and equipment, net | ¥ 2,891 | ¥ 3,890 |