Beijing-based 17 Education Technology Group (NASDAQ: YQ), formerly known as “17 Zuoye” (“Homework Together” in Mandarin), which raised USD 287.8 million in its Nasdaq initial public offering on Friday, only attracted moderate investor interest. The stock inched up 0.67% to USD 10.57 per share from its IPO price of USD 10.50, with a market capitalization of USD 2.25 billion.
Founded in 2012, 17 Education Technology delivers data-driven teaching, learning, and assessment products to teachers, students, and parents across over 70,000 K-12 schools, covering approximately 56% of the primary schools, 60% of the middle schools, and 7% of the high schools in China, according to the firm’s prospectus. In addition, it offers online K-12 large-class after-school tutoring services.
In the nine months ended September 30, 2020, the the average student daily active users (DAUs) and monthly active users (MAUs) reached 6.8 million and 19.5 million, respectively.
According to the prospectus, net revenues reached RMB 311 million, RMB 406 million, and RMB 807 million (USD 123.40 million), in 2018, 2019, and the first nine months of 2020, respectively. Net revenues from online K-12 tutoring services represented 93% of total net revenues in the January to September period.
The company continues to lose money. The net loss was RMB 656 million, RMB 964 million, and RMB 975 million (USD 149.09 million), in 2018, 2019, and this year’s first nine months, respectively. The main investors include Zhen Fund, Shunwei Capital, Tiger Global, Temasek Holdings, and DST Global. The firm closed a Series E round in 2018, raising USD 250 million.
China’s K-12 system had 178 million students at the end of last year, including approximately 105 million primary-school students, 48 million in middle school, and 24 million in high school, across over 226,000 learning institutions, according to 17 Education Technology’s filing.
Main competitors are Yuanfudao and Zuoyebang. Edtech unicorn Yuanfudao raised USD 1 billion in its Series G2 round led by DST Global, at a post-round valuation of USD 15.5 billion, while rival Zuoyebang is close to a USD 700 million to USD 800 million round, valuing the latter at USD 11 billion, KrASIA wrote in October.