Market view in daily routine: GSX Techedu Inc (NYSE: GSX)

GSX Techedu Inc (NYSE: GSX) started its trading session with the price $77 and closed at price of $80.01 by scoring 1.28%. Day range of the stock was $76.35 – $81.12. GSX stock traded with total volume of 3780965 shares while the average trading capacity remained 5257695 shares.  Earnings per share was $0.2. GSX has total market capitalization of $18.80B.

GSX Techedu Inc. (GSX) recently reported its unaudited financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 Highlights[1]

Net revenues was RMB1,650.3M, a 366.6% year-over-year increase.
–  Net revenues of online K-12 courses increased 412.4% year-over-year to RMB1,385.0M.

Gross billings[2] was RMB2,401.0M, a 300.6% year-over-year increase.
–  Gross billings of online K-12 courses increased 335.5% year-over-year to RMB2,196.1M.

Paid course enrollments[3] increased 331.7% year-over-year to 1,567 thousand.
–  Paid course enrollments of online K-12 increased 366.0% year-over-year to 1,496 thousand.

Net income increased 13.4% year-over-year to RMB18.6M.

Non-GAAP net income increased 133.0% year-over-year to RMB72.7M.

Net operating cash inflow increased 172.4% year-over-year to RMB528.0M.

Six Months Ended June 30, 2020 Highlights

  • Net revenues was RMB2,947.9M, a 373.3% year-over-year increase.
    –  Net revenues of online K-12 increased 427.8% year-over-year to RMB2,505.1M.
  • Gross billings was RMB3,775.4M, a 319.7% year-over-year increase.
    –  Gross billings of online K-12 increased 342.2% year-over-year to RMB3,286.7M.
  • Paid course enrollments increased 323.3% year-over-year to 2,341 thousand.
    –  Paid course enrollments of online K-12 increased 350.2% year-over-year to 2,143 thousand.
  • Net income increased 231.2% year-over-year to RMB166.6M.
  • Non-GAAP net income increased 282.4% year-over-year to RMB263.5M.
  • Net operating cash inflow increased 149.9% year-over-year to RMB645.7M.

 

Financial Results for the Second Quarter of 2020

Net Revenues

Net revenues reached RMB1,650.3M, a 366.6% increase from RMB353.7M in the second quarter of 2019. The increase was mainly driven by the growth in paid course enrollments for K-12 courses. The number of online K-12 paid course enrollments increased 366.0% year-over-year to 1,496 thousand, which was contributed by both first-time paid course enrollments and retention of existing students. The increase in first-time paid course enrollments was primarily driven by our effective investment in sales and marketing efforts and the increase in retention was primarily driven by high teaching quality and optimized services that we provided.

Cost of Revenues

Cost of revenues rose 256.4% to RMB360.7M from RMB101.2M in the second quarter of 2019, mainly Because of the increase in compensation for instructors and tutors, learning materials, rental expenses, as well as server and bandwidth costs.

Gross Profit

Gross profit increased 410.8% to RMB1,289.7M from RMB252.5M in the second quarter of 2019. Gross profit margin increased to 78.1% from 71.4% in the same period of 2019, primarily as a result of economies of scale.

Non-GAAP gross profit increased 408.1% to RMB1,305.4M from RMB256.9M in the same period of 2019. Non-GAAP gross profit margin increased to 79.1% from 72.6% in the same period of 2019.

Operating Expenses

Operating expenses were RMB1,450.4M, increasing from RMB236.3M in the second quarter of 2019.

Selling expenses increased to RMB1,204.8M from RMB169.0M in the second quarter of 2019. The increase was primarily a result of higher marketing expenses to expand the user base and enhance our brands, as well as a raise in compensation to sales and marketing staff.

Research and development expenses increased 240.4% to RMB139.9M, from RMB41.1M in the second quarter of 2019. The increase was primarily Because of a raise in the number of course professionals and technology development personnel, as well as a raise in compensation for such staff.

General and administrative expenses increased to RMB105.7M from RMB26.1M in the second quarter of 2019. The increase in general and administrative expenses was mainly Because of a raise in the number of general and administrative personnel, a raise in compensation paid to general and administrative staff, and a raise in fees for investigation purpose.

GSX has a gross margin of 77.60% and an operating margin of 5.40% while its profit margin remained 7.30% for the last 12 months. Its earnings per share (EPS) expected to touch remained 135.30% for this year while earning per share for the next year is expected to reach at 5.12.

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