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There is a way for Netease to go public, that is, to break the "re-engineering Netease"

via:CnBeta     time:2019/10/28 8:00:55     readed:688

NetEase youdao was founded in 2006 and is owned by NetEase.educationBusiness department, the company's products include youdao Dictionary, Youdao cloud notes, excellent classes and other learning tools products. On the basis of the success of youdao dictionary, NetEase youdao has continuously expanded and extended the users, and developed a series of products and services to meet the lifelong learning needs of preschool, K / 12, college students and adult learners.

NetEase's youdao prospectus shows that NetEase youdao's core business is mainly composed of four parts: online learning tools, intelligent hardware, online courses and interactive learning applications, including youdao Dictionary, Youdao Translation, Youdao Translation King, Youdao excellent course and other well-known products.

At present, Netease holds 66.2% of Youdao's shares, of which Ding Lei, founder of Netease, holds 30.1% and Zhou Feng, CEO of Netease Youdao, holds 20.6%.

Increasing income does not increase profit

For the development of Netease, Netease's support is not very big.

Before completing the first strategic financing in April 2018, NetEase youdao had been relying on NetEase for "blood transfusion". After completing the financing, NetEase youdao became the third independent financing brand after NetEase youdao completed its first strategic financing.

Ding Lei, chief executive of Netease, said in the fourth quarter of 2018 Netease Financial Reporting Conference that online education is the business direction of Netease's key layout. In the first quarter of this year's financial report conference call, Ding Lei again mentioned that Netease will increase its investment in online education, which will enable users of e-mail, games and music to share with Youdao education resources. Online education on this competition Road, the company will be more bold to invest in Netease Youdao.

According to previous reports in Finance and Economics, around the Spring Festival in 2019, NetEase carried out organizational upgrading and adjustment, and the education business, ecommerce business and public relations departments were separated from the original business department and upgraded from a secondary department to a first-class department. Education is listed as one of the core strategies of NetEase Group for the first time, and it is important before music.

However, although the number of active users of Netease Youdao monthly is more than 100 million, like many other online education platforms, it faces the dilemma of increasing revenue but not increasing profits.

NetEase's youdao revenue was 456 million yuan in 2017, 732 million yuan in 2018 and 549 million yuan in the first half of 2019, while revenue grew at 60.53 percent and 67.67 percent year-on-year in the first half of 2018 and 2019, respectively, according to its IPO data.

However, turning to net profit, Netease Youdao is still in a loss state. In 2017, 2018 and the first half of 2019, the net losses of Netease Youdao were 134 million, 209 million and 168 million yuan respectively, while the year-on-year growth rate of net losses in the first half of 2018 and the first half of 2019 was 56% and 105% respectively, and the growth rate of losses was always higher than the growth rate of revenue.

On the other hand, according to the prospectus, in 2017, 2018 and the first half of 2019, the number of paid students registered for the excellent courses was about 418000, 634000 and 338000 respectively. Compared with the total number of applicants, the payment rate of Youdao excellent courses is declining, which is 4.2%, 3.0% and 2.8% respectively.

Double fists are not equal to four hands

According to Frost

However, the factors such as excessive investment in online education industry promotion and high customer acquisition cost lead to the situation that most enterprises are difficult to make profits, which also makes capital retreat. According to the statistics of first insight's ultimate insight data, there were 227 investment and financing events in the education industry in the first half of 2019, a sharp decrease of 124 events or 35% compared with 351 events in the first half of 2018. The number of investment and financing events is significantly reduced, and the strength of capital support for education enterprises will be greatly reduced.

From the balance sheet, as of June 30 this year, NetEase youdao's book cash was 52.317 million yuan, the total assets were 639 million yuan, the total liabilities were 1.416 billion yuan, and the asset-liability ratio was as high as 221.6 percent. And as of June 30, 2019, NetEase youdao payable to NetEase Group outstanding interest-bearing short-term loans, the amount of 878 million yuan, accounting for a large part of the company's current liabilities.

It can be seen that even if the IPO Financing is included, Netease Youdao itself still faces a lot of capital pressure. However, the online education promotion investment is huge, which has attracted widespread attention in a few days ago. Netease Youdao inevitably has to invest in the war of burning money.

According to YiEuropean Network, Yuanfudao and three online K12 online schools, represented by learning and thinking online schools, spent a lot of money on nearly 10 enterprises during the summer vacation of 2019. During the summer vacation of 2019, nearly 10 enterprises invested 40-5 billion yuan in marketing activities. On the online education track, the traffic competition was as fierce as ever.

In recent years, the online education track has become more and more crowded, and New Oriental and tal, the leading educator, have been listed for many years, with strong teachers and high recognition of students; in 2018, New Oriental online, fluent English, 51talk elite education, Shangde institutions and other online education enterprises have flocked to the market; who has been successfully listed recently claims to have made profits; Tencent, Alibaba and other Internet giants In addition, there are powerful rivals such as vipkid, ape tutor and homework gang.

Looking back in 2016, Ding Lei once said, "through e-commerce businesses such as Netease koala and Netease strict selection, it will take three to five years to rebuild a Netease."

Not long ago, in the face of a depressed ecommerce business, NetEQ koalas were abandoned and sold to Alibaba for $2 billion, while NetEase Cloud Music was suppressed by the copyright of Tencent Music. NetEase youdao took the lead in listing and assumed the heavy responsibility of NetEase's new engine for growth.

There is no doubt that Netease Youdao will face more fierce competition. How to break through the online education market and add more vitality to Netease group? In response to relevant questions, investment line one has repeatedly called Netease Youdao, but it is unable to get in touch.

However, Youdao of Netease clearly knows that the road ahead is difficult. As Zhou Feng confessed in his open letter, "today, Youdao becomes a public company... This means that we have more responsibilities, more challenges and more torture from the outside world. "

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