Readboy Education Holding Company (2385) H1 2023 earnings summary

Executive summary

• H1 2023 revenue fell 51.5% YoY to RMB125.9m amid weaker tablet and wearable sales; gross margin rose to 38.6% from 25.6%.

• Reported net loss narrowed to RMB37.9m from RMB42.4m; adjusted results shifted to a RMB17.7m loss from RMB17.5m adjusted profit.

• H2 priorities include online learning, greater R&D investment, AI- and big-data-enabled solutions, and adapting to education policies.

Financial highlights

• Revenue declined 51.5% to RMB125.9m; cost of sales fell 60.0% to RMB77.3m and gross profit fell 26.9% to RMB48.6m.

• Other income and gains increased 6.0% to RMB32.6m, including RMB12.0m net FX gains and RMB5.6m time-deposit interest income.

• Selling and distribution expenses fell 8.6% to RMB36.8m; administrative expenses fell 30.7% to RMB17.7m, while R&D expenses rose 57.3% to RMB25.5m.

• Loss before tax was RMB25.6m, versus RMB46.5m; income tax expense was RMB12.4m, compared with a RMB4.1m credit in H1 2022.

• Adjusted net loss was RMB17.7m versus adjusted net profit of RMB17.5m, excluding listing expenses and fair-value changes.

Outlook and guidance

• H2 priorities include expanding online courses and learning resources, increasing online education R&D, and developing personalized solutions using AI and big data.

• Strategy includes responding to education-equality and burden-reduction policies, participating in public education projects, and strengthening innovation.

• Online education, vocational education and lifelong learning were identified as growth areas supported by continuing investment and policy support.