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Earning update: China Online Education Group (COE)

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China Online Education Group (COE) moved with shift of -3.92% in the past week. Over the last three months, the shares of the company have changed -21.48% and performed -33.66% over the last six months. The stock currently has Monthly Volatility of 4.79% and Weekly Volatility of 5.49%.

Last Monday China Online Education Group (COE) reported its unaudited financial results for the third quarter ended September 30, 2017.

Mr. Jack Jiajia Huang, Founder, Director and Chief Executive Officer of 51Talk, said that During the third quarter of 2017, Company decided to focus attention going forward on the company K-12 one-on-one mass-market product offering, which has a better margin proposition and the company believe is better suited to reach the large market potential

Furthermore he added “Our premium American Academy one-on-one program, which has a lower margin profile, will be positioned as a complementary product in our K-12 offerings. We believe this focus on the mass-market product offering will provide us a clearer path to profitability for our one-on-one business.”

THIRD QUARTER 2017 Financial Results

Net Revenues

Net revenues for the third quarter of 2017 were RMB236.1 million (US$35.5 million), a 95.1% raise from RMB121.0 million for the same quarter last year. The raise was primarily attributed to an raise in the number of active students and, to a lesser extent, an raise in the average revenue per active student. The number of active students in the third quarter of 2017 was 176.6 thousand, a 74.5% raise from 101.2 thousand for the same quarter last year.

Cost of Revenues

Cost of revenues for the third quarter of 2017 was RMB90.2 million (US$13.6 million), a 118.0% raise from RMB41.4 million for the same quarter last year. The raise was primarily driven by an raise in total service fees paid to teachers, Because of the delivery of an raised number of paid lessons as well as the raised cost per lesson with the expansion of western teachers.

Gross Profit and Gross Margin

Gross profit for the third quarter of 2017 was RMB145.9 million (US$21.9 million), an 83.3% raise from RMB79.6 million for the same quarter last year.

Gross margin for the third quarter of 2017 was 61.8%, compared with 65.8% for the same quarter last year. The decrease was mainly attributable to the expansion of the American Academy program, which has a lower gross profit margin.

Operating Expenses

Total operating expenses for the third quarter of 2017 were RMB285.7 million (US$42.9 million), a 40.3% raise from RMB203.6 million for the same quarter last year. The raise was mainly the result of raises in sales and marketing, product development, and general and administrative expenses.

Technical Indicators:

ATR value of company was 0.60. Average True Range (ATR) is an indicator based on trading ranges smoothed by an N-period exponential moving average percentage of the true range values. ATR can display volatility of stocks, ETFs and indexes. The principal of ATR is very similar to other volatility indicators: A high ATR value signals a possible trend change. A low ATR value correlates with a weaker trend movement.

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