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Online Educator Koolearn’s Generosity Goes Unappreciated by Investors

By Yang Ge / Aug 24, 2020 01:21 PM / Business & Tech

Photo: IC

Photo: IC

Online learning may be all the rage in China during these Covid-19 times. But cutthroat competition has meant that it’s hardly a lucrative pastime for the bumper crop of companies offering such services.

One of those, Hong Kong-listed Koolearn Technology, posted new financial results late Friday that show just how rough things are out there. The separately-listed online unit of leading education services provider New Oriental Education reported a modest increase of 17.6% in revenue to nearly 1.1 billion yuan ($159 million) for its fiscal year through May 31.

But its bottom line wasn’t quite so sedate, as its net loss ballooned to 742 million yuan from a 40 million yuan loss a year earlier.

In its report, it called the past year an “uncommon” period for many industries, referring to the turmoil created by the global pandemic. For education companies, that meant a huge spike in demand for their services as most traditional schools shuttered their classrooms and turned to online learning to avoid infections.

Koolearn said its own policy of offering many courses for free during the period was a major factor behind spiraling costs without a concurrent revenue increase. “Whilst these initiatives cushioned the impact Covid-19 had on students and parents in China, it required us to increase our cost of revenue as we have had to further invest in underlying infrastructure and human resources to meet the surge in demand in time and students using our products and services,” it said.

While its intentions may have been good, investors were less pleased with the company’s latest results. Its Hong Kong-listed shares were down 4% midway through the trading day on Monday.

Contact reporter Yang Ge (geyang@caixin.com)

Related: Chinese online English education firm Palfish raises $120m in Series C round


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