51Talk parent China Online Education Group (NYSE: COE) reported a narrower loss in the first quarter of 2019 as higher active students drove revenues higher by 23%. The results also benefited from lower costs and expenses as well as the successful and consistent execution of its strategic initiatives.
Net loss was $9.4 million, narrower than a loss of $17.96 million in the previous year quarter. Loss per American Depositary Share (ADS) narrowed to $0.45 from $0.90 a year ago.
Net revenues grew by 23% year-over-year to $48.1 million. The increase was primarily attributed to an increase in the number of active students. The number of active students for the first quarter of 2019 was about 227,400, a 19.2% increase from about 190,800 for the first quarter of 2018.
Net revenues from one-on-one offerings increased by 20.4% to $44 million and net revenues from small class offerings jumped by 61% to $4.1 million. Gross billings grew by 27.4% to $67.4 million.
The results reflect the successful and consistent execution of its strategic initiatives which focus on flourishing K-12 one-on-one mass-market program in China’s lower-tier cities. The company’s goal, as moving through the year, is to continue to make learning accessible throughout China by bringing its educational offerings to underserved markets where it can leverage existing programs.
Sales and marketing expenses increased by 8.6% mainly due to higher sales personnel costs related to an increase in the number of sales and marketing personnel. However, product development expenses dropped by 22.1% due to the lower number of personnel.
Looking ahead into the second quarter of 2019, the company expects net revenues in the range of RMB342 million to RMB347 million, which would represent an increase of about 21.4% to 23.2% from RMB281.7 million in the same quarter last year. Total gross billings are anticipated to be in the range of RMB465 million to RMB 470 million, which would represent an increase of about 10.7% to 11.9% from RMB420 million a year ago.
Shares of China Online Education ended Thursday’s regular session down 1.49% at $6.55 on the NYSE. The stock has fallen over 42% in the past year while it has risen over 11% in the past three months.