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In the second quarter of 2025, 51Talk Online Education Group reported significant revenue growth, with net revenues reaching $20.4 million, marking an 86.1% year-over-year increase. This growth aligns with the company’s impressive last twelve months revenue growth of 91.87%, as reported by InvestingPro. Despite an operating loss of $2.7 million, the market reacted positively, with the company’s stock price rising by 5.31% in regular trading and an additional 8.72% in pre-market activity.
Key Takeaways
- Revenue grew by 86.1% year-over-year.
- Stock price increased by 5.31% in regular trading.
- Operating loss reported at $2.7 million.
- Strategic focus on AI and innovation emphasized.
- Increased marketing and branding expenses.
Company Performance
51Talk demonstrated robust revenue growth in Q2 2025, with net revenues increasing by 86.1% year-over-year. This growth reflects strong demand in the online education sector, supported by an impressive gross profit margin of 77.74%. However, the company reported an operating loss of $2.7 million, highlighting the challenges of rising operational costs. According to InvestingPro’s analysis, the company currently maintains a ’GOOD’ overall financial health score of 2.58, despite not being profitable over the last twelve months.
Financial Highlights
- Revenue: $20.4 million (up 86.1% YoY)
- Gross billings: $28.5 million (up 79.7% YoY)
- Gross margin: 74.6%
- Operating loss: $2.7 million
- Net loss: $3 million (up 144.7% YoY)
- Earnings per ADS: Negative $0.52 (GAAP), Negative $0.46 (non-GAAP)
- Total cash and equivalents: $30.9 million
Market Reaction
The market responded positively to 51Talk’s earnings report, with the stock price climbing by 5.31% in regular trading and 8.72% in pre-market activity. The stock has shown remarkable momentum, delivering a 90.69% return year-to-date and an impressive 171.09% return over the past year. The stock’s current trading price of $42.5 is a significant improvement from the previous close of $39.091, indicating strong investor confidence. For deeper insights into 51Talk’s valuation and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro.
Outlook & Guidance
Looking ahead, 51Talk projects Q3 2025 net gross billings to be between $36.5 million and $37.5 million. The company remains confident in its growth trajectory, supported by a strategic focus on scaling learning experiences and enhancing AI-driven innovations.
Executive Commentary
CEO Jack Wang emphasized the integral role of AI in the company’s strategy, stating, "AI remains integral to our strategy and operations." CFO Cindy Tang highlighted efforts to improve operations, noting, "We are focusing on doing our business to improve our operations."
Risks and Challenges
- Operating losses and increased expenses may pressure future profitability.
- Market conditions and competition in the online education sector could impact growth.
- The transition to Ernst & Young as an auditor may pose short-term challenges.
Q&A
During the earnings call, investor Tobey Lu inquired about the change of auditor from Marcom to Ernst & Young and addressed concerns over low stock liquidity and the potential for a stock split. These questions reflect investor interest in corporate governance and stock performance strategies.
Full transcript - 51Talk Online Education Group DRC (COE) Q2 2025:
Conference Operator: Hello, ladies and gentlemen. Thank you for standing by for 51Talk Online Education Group’s Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Today’s conference call is being recorded. I will now turn the call over to your host, Mr.
David Chung, Investor Relations for the company. Please go ahead, David.
David Chung, Investor Relations, 51Talk: Hello, everyone, and welcome to the Second Quarter twenty twenty five Earnings Conference Call of 51Talk. The company’s results were issued via newswire services earlier today and are posted online. You can download the earnings press release and sign up for the company’s distribution list by visiting ir.51top.com. Mr. Jack Wang, our CEO and Ms.
Cindy Tang, our CFO, will begin with some prepared remarks. Following the prepared remarks, there will be a Q and A session. Before we continue, please note that the discussion will contain forward looking statements made under the safe harbor provisions of The U. S. Private Securities Litigation Reform Act of 1995.
Forward looking statements involve inherent risks and uncertainties. As such, the company’s results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in the company’s Form 20 F and other public filings as filed with the U. S. Securities and Exchange Commission.
The company does not assume any obligation to update any forward looking statements except as required under the applicable law. Please also note that earnings press release and this conference call include discussion of unaudited GAAP financial information as well as unaudited non GAAP financial measures. 51Talk’s press release contains a reconciliation of the unaudited non GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO, Jack Wang. Jack, please go ahead.
Jack Wang, CEO, 51Talk: Thank you, Debbie. Hello, everyone. Thank you very much for joining our conference call today. Q2 twenty twenty five has been a strong quarter for us. The gross billing exceeded our guidance, reflecting healthy demand and disciplined execution.
We expect this positive momentum to carry into the 2025. Our third quarter guidance reflects our confidence in the company’s trajectory. We have also deepened our investments in enhancing user experience and service quality. We believe these initiatives will strengthen our competitive position and create durable long term value for our shareholders. AI remains integral to our strategy and operations with applications spanning across the company.
We remain steadfast in our commitment to developing robust infrastructures and systems necessary to embed AI across our products and processes with the objective of delivering exceptional learning experience to our students at scale. With that, I will now turn the call over to Cindy, our CFO.
Cindy Tang, CFO, 51Talk: Thank you, Jack. Now let me walk you through our second quarter financial details. Second quarter net revenues were US20.4 million dollars an 86.1% increase from the same quarter last year, largely driven by the increase of active students with attended lesson consumption. Gross margin for the second quarter was 74.6%. Gross billings grew by 79.7% from the same quarter last year to US28.5 million dollars Q2 operating expenses were US17.9 million dollars an increase of 53.5% compared to the same quarter last year.
Specifically, this has been driven by Q2 sales and marketing expenses of US12.8 million dollars a 74.8% increase from the same quarter last year due to the rise in marketing and branding expenses resulting from marketing and branding activities as well as higher sales personnel costs related to increases in a number of sales and marketing personnel. Q2 product development expenses were US1.2 million dollars a 45.5% increase from the same quarter last year. Finally, Q2 general and administrative expenses was US3.9 million dollars a 39.1% increase from the same quarter last year. Overall, Q2 operating loss was US2.7 million dollars while net loss attributable to ordinary shareholders was US3 million dollars a 12.7144.7% increase from the same quarter last year, respectively. Q2 GAAP and non GAAP earnings per ADS were negative US0.52 dollars and US0.46 dollars respectively.
The company’s total cash, cash equivalents and time deposits were US30.9 million dollars at the end of the second quarter. Advances from students were US56.4 million dollars at the end of the second quarter. Looking forward to the 2025, we currently expect the net gross billings to be between $36,500,000 and $37,500,000 The above outlook is based on our current market conditions and reflects the company’s current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks. We will now open the line for questions.
Operator, please go ahead.
Conference Operator: On your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. The first question today comes from Tobey Lu, a Private Investor. Go ahead.
Tobey Lu, Private Investor: Dear management team, congratulations for having such a good result. Yes, so I have two questions. The first question is I noticed that we have changed the accounting firm to the Ernesto Young. So could you please describe the reasons that why we changed it from Martin to Ernesto Young? And yes, so what’s the consideration behind that?
Thank you.
Jack Wang, CEO, 51Talk: Okay. Thank you very much. This is your first question, right?
Tobey Lu, Private Investor: Yes.
Jack Wang, CEO, 51Talk: Okay. So first of all, we really want to express our appreciation to our auditor, Marcom. We believe they have their service quality and they are very professional in terms of the accounting. But
Tobey Lu, Private Investor: as you know,
Jack Wang, CEO, 51Talk: a lot of investors,
Tobey Lu, Private Investor: they
Jack Wang, CEO, 51Talk: have the a lot of them have the mandate about the auditor, especially some of them have mandate about the big fall. So that I think that is the key reason that we choose ENOA for the auditor.
Tobey Lu, Private Investor: So basically, this means that the change of the auditing firm is a way for us to enlarge our investor base so that some investors maybe after we change the audit and further we can fill the investment criteria, right?
Jack Wang, CEO, 51Talk: Yes. We think with the big four after we change the auditor to the big four to E and OA, some of the investors some of the potential investors, they can buy the stock of COE.
Tobey Lu, Private Investor: Yes, yes. Got it. Got it. Yes. And my second question is also related to investors.
So I’ve noted that actually our stock is trading with relatively low liquidity and the beta spread is usually quite large compared to other stocks who have the similar market cap. So is there any intention for us to increase the liquidity, for example, like conducting some soft split or maybe other incentives to increase our turnover rates or maybe to lower the beta spread? Yes. Thank you.
Cindy Tang, CFO, 51Talk: Thank you for your question. Yes, you are right. Our liquidity is low. But for now, we have we don’t have a near plan to do any stock splits or other alternatives to increase it yet because now we are actually focusing on doing our business to improve our operations, which we believe will provide more sustainable and fundamental value to our investors. But in the future, we will also consider all these alternatives.
But now we don’t have a recent plan yet.
Tobey Lu, Private Investor: Okay. Yes, got it. Thank you for addressing my question. Yes, thank you.
Cindy Tang, CFO, 51Talk: Thank you.
Conference Operator: There are no further questions at this time. I’d like to hand the conference back over to the company for any closing remarks.
David Chung, Investor Relations, 51Talk: Thank you once again for joining us today. If you have further questions, please contact 51Talk’s Investor Relations through the contact information provided on our website.
Conference Operator: This concludes the conference call. You may now disconnect your lines.
Jack Wang, CEO, 51Talk: Thank you.
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